Binance, the world's leading cryptocurrency exchange, has announced a shift in its token listing strategy, prioritizing small and medium cryptocurrency projects, emphasizing community allocations and sustainable market practices. 

This move comes in response to growing concerns about high Fully Diluted Valuation (FDV) and low circulation tokens, which have negatively impacted investors. 

Background

A recent analysis by a prominent crypto and macro researcher, known as "Flow," has highlighted troubling trends in Binance's token listings over the past six months. 

More than 80% of these tokens have experienced a decline in value since their initial listing. This finding raises questions about the viability and sustainability of these projects, especially given their significant valuations at launch.

Flow's research reveals that while a few tokens, such as ORDI, JTO, JUP, and WIF, have defied the downward trend, they are exceptions. Most tokens, including NFP, PORTAL, and AEVO, have suffered substantial losses. 

This pattern suggests a prevalent issue of overvaluation followed by rapid depreciation. Securing a listing on a major exchange like Binance is seen as a milestone, yet many projects fail to maintain their initial value.

Binance's Response

In response to these concerns, Binance announced it will prioritize support for small and medium cryptocurrency projects through various programs, including Direct Listing, Launchpools, and Megadrops. 

“We hope to enhance the development of the blockchain ecosystem through our support to small and medium-sized projects with strong fundamentals, an organic community base, a sustainable business model, and a dedicated team acting as responsible industry participants,” Binance stated.

Binance emphasized that these projects must reserve a large amount of token allocations for community users.

New Listing Criteria

Binance's new listing criteria focus on several key aspects:

Sector Inclusivity: Binance invites projects from all sectors to apply for listing. The goal is to ensure a diverse range of market participants and innovations in the blockchain ecosystem.

Valuation: The exchange is looking for projects with small to medium valuations relative to their competitors. This approach aims to mitigate the risk of overvaluation and subsequent depreciation.

Tokenomics: Projects must demonstrate significant token allocation for community users, such as airdrops and community rewards. Additionally, Binance requires a moderate token float during token generation events (TGE) and less allocation to non-community users.

Why This Matters

According to Binance, launching tokens with high FDV and low circulating supply can lead to dilutions from future unlocks, placing selling pressure on tokens. This market structure is unfavorable for retail investors and loyal community members. 

Binance aims to reshape the current trend and foster a more diverse and resilient market environment by supporting smaller projects with strong fundamentals.