Gareth

"Tier 1 eastern exchanges are like the mafia" That's the DM I got which kicked it all off... Binance and other Tier-1 exchanges have a stranglehold on our industry Here's some thoughts from Web3 Founders, anonymously. “What you’ve heard about Binance is 100% true and some of the terms are even worse than what you’ve been told” This all started when I stated on Gamified "This isn't common knowledge but just so people know - I've heard Binance takes 10-20% of your token supply" I received a lot of DMs with more compelling information, but no one can go on the record without risking the long-term success of their project, thus the anonymity. To be clear, these are anecdotes and a summary of information, I'm not guaranteeing that any or all of this is 100% accurate. DYOR, not financial advice. Now, here's the tea: • The Pre-TGE application is incredibly high scrutiny diligence (sometimes bordering on excessive diligence compared to anywhere short of court). •“They often ask you to provide a legal opinion from a law firm that states your token is not a security, "which is nearly impossible to get in some jurisdictions like the US” (pushing the liability of them listing to YOU) and it’s based on the jurisdiction of the exchange meaning you likely need multiple opinions for different exchanges” • a % of tokens and payment in USD often accompanies these negotiations, but depending on terms these fees can often be earned back based on whether certain onboarding numbers, volume metrics, etc milestones are met. "Fees have multiplied in the last 6 months" • Tier 3 used to charge ~50k, now asking for ~200k-300k • The same exchange will gave 2 different quotes on very similar projects... " I had one project receive a quote of $1m security deposit, a similar game 2 weeks later was asked for 1.5m and they couldn't explain the disparity" • CEX are also charging more for "security deposit", which is a pre-funded USDC account. If the token performance in price falls below a predetermined threshold for a period of time (like 24-48 hrs), the deposit is not returned to the project. “this isn’t a fair system with menu pricing, they will maximally extract what they can” “the level of bad faith negotiating has gotten a lot worse” • "The terms that exchanges are pushing for is not only costly to the project, but it's also misaligned with the core community of the project. " Many times the exchanges are pushing to have projects to delay their TGE or airdrop to the community and have the token launch via their launchpool or launchpad instead. Effectively this allows the exchange users to frontrun community liquidity. The incentives are getting more and more distorted. • If it’s a porject thats going to be a multi-billion dollar launch, they split it into 2 things, launch pool allocation which is ~3%, but what they don’t say is the Binance advisory fee which is really where they whack you, starting point is 3% again. • If you don't list, that's likely to be perceived as weakness. But all it really means is that the token supply that could have gone to community, more of it is being allocated to CEX. For questionable return. • Their filter isn't really quality of project, it's the ones that will bring them the most users (wallets that sign up to their exchange), and can create the most volume in trading. • it is definitely a ‘pay to play’ kind of environment. Market makers can play a legitimate function in the market, but are not all made equal. • The way exchanges ask for money is quite interesting - if they want 200k they ask for $200k equivalent paid in tokens, and they make the value of those tokens debatable. The fair market value at launch might be $1.00 but they’ll ask for $200k in tokens at $0.10 so the price isn’t 200k it’s really $2m “basically every exchange does that” They also add up a bunch of unexpected costs like “listing cost” “implementation fee” and “marketing budget” • Nearly all projects will need to re-negotiate their terms with all their previous investors to take on BInance's requirements • Post-launch: they want to see volume (ie. where they make their fees) This is a double-edged sword and playground rife for manipulation. • They are charging higher and higher fees as they have all the pricing power. Projects generally bend over and take it because there's really no alternative. • This in no small part is driving the social farming meta, because every project is trying to show vanity metrics because that's what Exchanges want to see. • Any ‘utility’ token has to have basically an iron-clad defensible argument. Meme coins don’t really have this roadblock (no expectation, no utility, just ‘vibes’, etc) which is one of the reasons I believe we’ve been seeing many exchanges supporting explosive memecoins relatively quickly post-launch this cycle, where as ‘legitimate’ projects have a much higher hurdle to clear. • Amongst the top exchanges (call it Tier 1/2), no one wants to necessarily be the first to take on the exposure of a big/risky token listing, but once/if a Tier 1 exchange agrees to list, many others will get aboard fairly quickly (‘if its good enough for them, its good enough for us’ kind of mentality) • Projects are all trying to listing on exchange. The consensus is that this bull has another maybe 18 months left. If teams want some type of liquidity event this cycle (because most are subject to 12 mos locks) Then they have to list now. And for some perspective, here's a couple of founders opinions on whether T1 exchanges are good or bad for the ecosystem: "I don't see how T1 don't take advantage of the situation, it's not their responsibility for the better products to be funded as they are in a highly competitive space as well." And on if they will accept bad projects just for the financial benefit: “you will never get a project on Binance launch pool that couldn’t have gotten on there it’s self, they’ll never take a trash-tier project” ------------------------------------------ I want to give a huge thank you to the founders who anonymously shared this information. If you benefitted from this content, please let me know so I can make more of it.

Looks like Nelson’s back in the squad.

🔵 2.23.23

1/ We're hearing rumors that the SEC would like to get rid of crypto staking in the U.S. for retail customers. I hope that's not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen.

Cyclists overpay for uncomfortable lighter bikes w/fragile thin wheels that can go faster with less effort per mile. They claim they bike to get fitter, not realizing they then should have bicycles that require more effort per mile. Actually Pelotons require infinite work/mile.