How to plan your token listing and how can a market maker support it?

Why to list your token

15 March 2023

So you have poured your time, effort, and expertise into developing a promising blockchain project. You firmly believe in the value it brings to the table.

In the rapidly evolving world of cryptocurrencies and blockchain technology, exchange listings serve as pivotal milestones for projects like yours. Whether you are eyeing a centralized exchange or exploring the decentralized realm of DEXes, navigating the listing process successfully requires careful consideration, strategic planning, and a deep understanding of the procedures involved.

In this article, we will delve into the crucial factors and essential steps that can make the difference between a token’s successful listing and being lost in the vast sea of digital assets.

While token listing may require effort and resources, the rewards and advantages make the endeavor worthwhile. Here are some compelling reasons why listing your token should be a top priority for you:

• Increased Exposure: By listing your token on an exchange, you expose your project to a larger audience of investors, traders, and enthusiasts. It offers a platform to showcase your project’s unique value proposition, gaining visibility among potential supporters who can contribute to your project’s success. It is a good distribution strategy for your token to gain more investors and enable the accessibility of the asset; the better the exchange for the listing, the more new investors will be able to access and trade your token. The listing also improves your project’s credibility and is an opportunity to get listed on CoinMarketCap, Coingecko, or similar portals – so that the broader community can learn about your project and the token.
• Enhanced Liquidity: One of the most significant advantages of listing on an exchange is the boost in liquidity. It enables participants to buy and sell your token easily, increasing organic trading volume and market activity. Enhanced liquidity not only attracts traders but also facilitates price discovery (the price is constantly adjusted to meet the current demand and supply) and reduces market volatility.
• Price Discovery and Market Efficiency: Exchanges provide an open marketplace where token prices are determined by supply and demand. Listing your token allows for efficient price discovery and ensures that it reflects the perceived value by the market participants. This transparency and market-driven pricing contribute to a healthy ecosystem for your token.
• Market Validation: Exchanges conduct rigorous due diligence before listing a token, evaluating factors such as project viability, technology, team, and compliance. Successfully passing these evaluations provides a stamp of approval and validates the credibility and potential of your project. It can enhance trust among stakeholders, investors, and users. Trading your token on a good exchange helps improve trust and credibility among your community and investors.

Start the process to get your token listed

Before DEXes arrived, projects were listing their coins on centralized exchanges only. Today many smaller projects choose to list only on DEXes. Let us see why.

Listing on centralized platforms

Listing a token on a centralized exchange involves several steps and procedures. While the specific requirements may vary among exchanges, here are the general steps to consider when pursuing a listing:

1. Research and make a shortlist of suitable CEXes: Take your time to research and to identify centralized exchanges that align with your project’s goals, target market (geographically), and listing requirements, creating a shortlist of exchanges that best suit your needs.
2. Understand exchange listing criteria: familiarize yourself with the specific guidelines and requirements of each exchange on your shortlist, ensuring your project meets the necessary prerequisites such as project viability, token standards, trading volume, and market capitalization. Some exchanges will want to check whether you have an MVP already.
3. Prepare legal and compliance documentation: ensure all required legal documentation, such as legal opinions, terms of service, privacy policies, and necessary licenses or registrations, are prepared to demonstrate regulatory compliance to the exchange during the listing process.
4. Engage with verified listing teams: establish communication and engage with the verified listing teams of the chosen exchanges to inquire about the listing process, clarify doubts, and understand specific requirements, streamlining the listing procedure. A good market maker will make intros to well-established exchanges.
5. Engage with a reputable market maker: collaborate with a reputable market maker to enhance liquidity and market stability for your token, ensuring a healthy trading environment for investors on the exchange.
6. Complete exchange listing applications and due diligence: submit the application to the exchange, providing all required information, documentation, and compliance materials, and be prepared for the exchange to conduct due diligence on your project, evaluating factors such as a whitepaper, team, technology, legal compliance, and token economics.
7. Negotiate listing terms & fees: after successfully meeting the exchange’s listing requirements and passing the due diligence process, negotiate and finalize the listing agreement, ensuring you understand the associated costs, ongoing obligations, and any specific terms or conditions.
8. Announce the listing: coordinate with the exchange to announce the token listing, utilizing various marketing channels and strategies to generate awareness, attract investors, and drive trading volume on the platform.
9. Maintain the exchange relations: last but not least, maintain regular communication with the exchange, nurture the relationship, and stay updated on any requirements, updates, or opportunities that may arise, ensuring a mutually beneficial partnership for long-term success.

As of March 2023, there are 237 centralized exchanges listed on CoinMarketCap.

If you are a startup token, you need to define a realistic token listing strategy, starting with listing on Tier 2/3 exchanges first (TOP 100 CoinMarketCap exchanges without the TOP 10), and then slowly adding more liquid venues to your portfolio.

Pros of a centralized platform listing:

• Liquidity: CEXs typically have higher liquidity compared to DEXs, making it easier for traders to buy and sell tokens at desired prices.
• User base: these exchanges have a pre-existing user base that will help your token build a community
• User Experience: they are usually much more user-friendly than DEXes, making access to your token easier for the community and investors
• Compliance: CEXs usually have stricter regulatory compliance measures in place, which can provide a sense of security and assurance for investors and projects.
• Fiat Integration: Some CEXes offer direct fiat currency support, allowing users to easily trade between cryptocurrencies and traditional currencies.

Cons:

• A lot of formalities: centralized exchanges are always under the radar of governments and regulatory entities, which makes it harder for some projects to pass all the formal requirements;
• Fees: CEXs often charge listing fees, ongoing maintenance fees, and trading fees, which can be substantial and pose a barrier for smaller projects; listing on good crypto exchanges can be pricey… up to 1 mln USD for the Tier 1 exchanges
• Timeline: it takes weeks, sometimes months, to go through the process (so it is good to plan that well ahead)

Listing on decentralized exchanges

If your project is considering listing the token on decentralized exchanges (DEXes), there are some important points to address:

1. Understanding DEXes (which function a bit differently than the centralized exchanges): DEXes operate on decentralized protocols, enabling peer-to-peer trading without intermediaries. It’s crucial to grasp their unique characteristics, such as the use of smart contracts, decentralized order books, and different token standards like ERC-20 or BEP-20.
2. Research & make a shortlist of considered DEXes: conduct research to identify decentralized exchanges that align with your project’s goals and target audience, creating a shortlist of DEXes that offer the desired features, liquidity, and compatibility with your token.
3. Deciding about the liquidity provision strategy: determine your liquidity provision strategy, which may involve leveraging automated market maker (AMM) protocols or providing liquidity through liquidity pools. Consider the advantages, risks, and costs associated with each approach to determine the most suitable option for your project.
4. Understanding the listing processes for the selected DEXes: familiarize yourself with the listing processes and requirements of the selected DEXes on your shortlist, which may involve steps such as token contract verification, community voting, or submission of listing applications. Ensure compliance with any specific guidelines or procedures.
5. Market-making and promotion activities: develop a comprehensive market-making and promotion strategy to drive liquidity and trading activity on the DEX. This may involve activities like incentivizing liquidity providers, engaging with the community, implementing marketing campaigns, and fostering partnerships to increase token visibility and attract traders.

DEXes are the easiest alternative to a CEX listing. As of March 2023, there are 324 decentralized exchanges listed on CoinMarketCap.

Pros of a decentralized platform listing:

• Decentralization: DEXs operate on decentralized protocols, eliminating the need for a central authority and providing a more trustless and transparent trading environment
• Security: DEXs reduce the risk of hacks or theft since user funds remain in their control and are not held by the exchange.
• No fees: listing new tokens on a decentralized exchange is usually free
• Fewer formalities: there is almost no verification process for listing coins on DEXes, no KYC/AML procedures
• Quick listing process: the listing procedure for new crypto assets is very fast

Cons:

• Lower Liquidity: DEXes often have lower trading volumes and liquidity compared to CEXes, which can result in wider bid-ask spreads and potentially impact price stability.
• Standing out from the crowd: low entry barrier into a DEX results in too many tokens listed there; it is not easy to stand out from the crowd; at the time of writing the article, PancakeSwap (V2) had 3981 markets
• User Experience: DEX interfaces and user experiences may be less intuitive or user-friendly compared to centralized platforms, potentially impacting adoption and user engagement.

How can a market maker help a token project?

By engaging a market maker before the listing, a token project can benefit from their expertise and market insights, optimizing their listing strategy and increasing the chances of a successful and well-executed listing on the chosen exchanges.

What can they help you with?

Exchange Selection: market makers are often well-connected within the cryptocurrency industry and have relationships with various exchanges. They can offer guidance on selecting the most suitable exchanges for the token project’s listing, considering factors such as liquidity, target market, trading pairs, and listing requirements.

CEX-DEX dilemma: market makers can provide valuable assistance in navigating the CEX vs DEX dilemma for a token project. They can assess the project’s budget, liquidity requirements, target audience, trading pairs, and listing criteria to determine whether a CEX or DEX would be more beneficial.

Going with a reputable liquidity partner helps: All good centralized exchanges require projects to have at least 1 market maker ready from day one if they succeed in listing on their platform. Having well-known market makers committed to the projects helps the listing. ANd what happens if you list without a market maker? Projects with very low liquidity will be delisted relatively quickly on many reputable exchanges.

Ethical market-making partner: It is key that projects understand the role of the market makers and have healthy expectations regarding the metrics of their markets after they get listed. Please check our market making article to read more about that.

Avoiding scams: There have been many cases in the past, where scammers pretended to be listing managers and charged token projects for listing on an exchange. In the era of Telegram and Discord communication, you should always verify that you speak to real exchange representatives. Some exchanges guide you on their Web pages, on how you can verify the identity of the listing managers.

Ask your market maker to introduce you to platforms’ representatives. They have proven networks of business developers and listing managers on various venues.