Private investors may love trading volume, but what truly brings value to a project? Are there other features that DEX’s can provide to a project beyond trading volume?

It’s not surprising in a realm riddled with abstract whitepapers and theoretical roadmaps that the judgement of a project’s value is now largely based on much more discernable feature: which exchanges a token is listed on.

A project’s exchange listing has become like a high school popularity contest. You’re listed on Binance? Baller status. Oh you’re only on Liqui? No cheerleaders for you. Only listed on Etherdelta? Take your seat at the glue-eater table, kid.

This logically doesn’t make any sense. A project’s value should be determined by more than their listing status. Additionally, listing on multiple types of exchanges can provide more to a project than they might immediately realize. It’s time to re-evaluate what values exchange listings can provide.

Why do token projects want to be listed on big exchanges anyway?

Let’s take a step back for a second. Why would a project even care about where they’re listed?

Hint: it’s all about the money

Omg I totally bet you didn’t see that coming. Yeah, it’s money.

Both investors and project members like to see project liquidity so that they can easily cash out their investments at some point. Large exchanges boast the most liquidity for these projects, so getting listed on a large exchange gives big token holders easy access to capitalize on their token depth.

Trading volume or bust

On coinmarketcap.com (if you’re unfamiliar with CMC I truly don’t know how you made it this far, but kudos to you good sir/madam) exchanges are ranked by only 1 metric: trading volume.

Why is this the only metric we currently care about?

Trading volume is used as an indication of liquidity on an exchange. The idea is that more trades mean more people are using the exchange, and it is theoretically easier to cash-out or buy-in there.

Never mind the fact that a massive portion of this reported trading volume is likely completely fake. Let’s just continue to blindly trust that centralized exchanges are reporting real numbers to us. It’s not like it’s in their best interests to give higher numbers or anything, right? And there’s no publicly verifiable record to hold them accountable, since their reported transactions are all off-chain.

Regardless of real or fake volume, this is the nature of how token projects view exchanges right now. Decentralized exchanges have much lower volume than centralized exchanges, so they are currently viewed as unimportant. Is this really correct though? Decentralized exchanges provide a huge amount of additional perks that are completely ignored by most projects right now.

“Oh man, Erlich, you glorious handsome man-beast, what are these mysterious perks?” you ask? Don’t worry, I got you.

5 ways decentralized exchanges provide additional value to a project

Advanced userbase and long term value investors Liberal listing process — no middleman fees On-chain transactions, activity, and token holders Positive communitiy support and airdrop support Tech and UI improvements

I’ll go into greater detail on each of these points below for the truly devoted reader.

1. Advanced userbase, long term value investors

Decentralized exchange users are actually already DAPP users (that’s what DEX’s are). They are early adopters. These users are already using integrated wallets like ledgers, MetaMask, mobile browsers, etc. to interact with DEX’s. Since many token projects revolve around the idea of using their token in a DAPP, these users are a much more representative portion of their target audiences.

Projects that list on mobile-friendly DEX’s also get instant access to mobile traders.

Decentralized exchange users are also more likely to be long term value type investors. These are users that can actually understand a token’s project, and are investing in the technology instead of just trading for profit. These are exactly the types of users projects want to increase their token value.

2. Liberal Listing Process — no middleman fees

Many centralized exchanges require absurdly costly listing fees. Yet another reason why this current process is sketchier than Trump commenting on his daughter’s “vivacious body”. Ugh. Listing on decentralized exchanges is free.

From a moral standpoint this makes more sense too. Currently projects are spending millions of dollars that were really intended for development to get listed on these exchanges. Many project supporters invest into the project because they want to see the technology succeed: spending their money on a costly listing fee is, like, so super lame.

3. On-chain transactions, activity, and token holders

One thing that centralized exchanges completely miss out on is on-chain activity. The number of actual on-chain, real, public records of token transfers is virtually non-existent for centralized exchanges.

While a project might not care about that so much right now, it will be a feature that carries more value as the space develops. How many people are actually using a token? How much real, verifiable trade volume does your token have? These are things that people should be asking, and sites like http://dappboard.com/app that track actual token usage are starting to pop up.

Kitties!

Additionally, centralized exchanges actually can reduce a projects number of token holders. DEX’s allow users to maintain token ownership in their wallets.

4. Positive community support and airdrop friendly

Cryptocurrency is built around the idea of decentralization. There is massive community support for anything that can provide value to the idea of a decentralized future. Etherscan even has a dedicated DEX section!

Along the same community support line, airdrops are also easier to navigate on DEX’s. No deposit/withdrawal fees means that it’s easier for these airdrops to actually provide value to a user.

5. Technology and UI has come a long way

The old school decentralized exchanges were clunky at best and infuriating at worst. UI improvements coupled with technology improvements (like projects utilizing 0x) are providing a much more pleasant user experience.

Fees are often lower (or non-existent, minus gas) when compared to centralized exchanges too. No depositing or withdraw fees either, since that process is completely gone.

What are some good decentralized exchanges to list on now?

Alright so I’ve obviously convinced you with my brilliant analysis that DEX’s provide unique value to token projects. So which ones are good? Here’s a few suggestions that I’ve used, though this is far from an exhaustive list:

The first DEX to actually have anywhere near a significant amount of trading volume. Despite some management foibles, ED still has a considerable userbase. You can request new tokens by on Etherdelta by posting on their subreddit here.

DDEX is built on the 0x protocol but actually offers limit orders. UI seems pretty intuitive, and they have been extremely active recently in promoting new features like mobile wallet trading on various mobile browsers. You can request new tokens on DDEX here.

Another 0x relayer project, ERCDEX is setup to allow market and limit orders. One interesting thing is that trading on ERCDEX actually uses ZRX to pay fees. You can request new tokens on ERCDEX here.

Summary

Listing tokens on decentralized exchanges is a smart move to setup a project for future developments, despite the lower trading volume. I believe we will see a few DEX’s grow and evolve to produce a more fair, publicly view-able, and REAL crypto landscape.

Erlich