Binance, the leading cryptocurrency exchange by trading volume, has listed 30 tokens since the beginning of 2024. However, most of these new projects have shown declining performance.
Many of the newly listed tokens on Binance were introduced at high valuations, and there are reports of major venture capital firms backing them.
Binance 2024 Listing Failure
According to Coin98 Analytics, out of the 30 tokens listed on Binance this year, only Jupiter (JUP) is in the green. Surprisingly, most tokens have recorded double-digit losses, with interest being particularly high for those with tier 1 backers.
With the exception of JUP, all 29 tokens have seen significant declines in their fully diluted value (FDV) metric, which represents the total market capitalization of an asset when all available tokens are in circulation.
Tokens backed by Binance Labs, including AI, MANTA, AXL, ENA, REZ, BB, and LISTA, have fallen between 44% and 90%. Other tokens from venture capitalists (VCs) such as a16z, Paradigm, Coinbase Ventures, Galaxy, and Pantera Capital have also seen declines.
Read more: What are the best altcoins to invest in in May 2024?
But Web3 developer Vinay argues that it might be wrong to look at token performance in isolation due to market changes.
“Here’s a comparison of Binance listed projects with ETH and OP (the darling of CT, one of the biggest growth projects in the web3 space) to see their relative performance. Vs OP: 9/30 positive, 4 almost flat. Most of the worst performing projects were listed in April, by which time the market bids had died down,” Vinay wrote.
According to this analogy, out of the 30 projects compared, 9 performed positively, while only 4 remained relatively stable. This suggests that some projects remained stable despite the overall market downturn.
According to this analysis, the worst performing stocks were those that listed in April, when market sentiment may have shifted.
Researchers deconstruct the VC role.
Nevertheless, the report highlights the interest in Binance as an exchange for launching new projects. Possible reasons for this include the dominance of the trading platform and high liquidity. These indicators make it attractive for insiders to exit their investments in these assets.
As BeInCrypto reported in May, crypto research firm Flow credited Binance with providing liquidity to VCs.
“If you had a portfolio that invested the same amount of money every time a new Binance listing was listed, you would have lost more than 18% over the past six months,” Flow said.
Read more: How to Fund Innovation: A Guide to Web3 Grants
A recent study conducted by Dragonfly Managing Partner Haseeb Qureshi provided compelling data showing that one of the reasons for the token’s decline was because retail investors were furious and sold off after realizing that VCs owned the majority of the tokens, especially in April.
“Well, it may not have been retail investors pulling money out of VC tokens and into memes, but here’s the sub-theory: VCs owned too much of these projects, so retail investors got angry and left. They realized (mid-April?) that these were all scam VC tokens and the teams and VCs owned ~30-50% of the token supply. That may have been the straw that broke the camel’s back,” Qureshi said.
Another perspective shared in the study is that the supply of these tokens is too small to allow for value discovery.
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