Crypto listing is a process when a crypto coin or token is added to an exchange. For example, if a token is added for trading on Binance, we say that Binance listed the token.
Table of contents
- Listing In Traditional Financial Markets
- Listing in the Crypto Market
- Stages of Crypto Listing
- Types of Crypto Listing
- Impact of Listing on Crypto Prices
- Risks and Challenges of Listing
- How Investors Can Use Listings to Their Advantage
- Conclusion
After listing on an exchange, the crypto asset becomes available for trading. Traders can buy, sell, or swap the asset for other coins and tokens on the exchange.
Listing is very important for a crypto asset. The more exchanges list it, the more popular it becomes. Normally, the price of the asset increases when it is listed on important exchanges.
Why Is Listing Important?
Listing is very important for crypto coins. When an asset is listed on an exchange, traders can start using it to trade. In other words, a listing makes the asset available to a broader audience.
Also, exchanges normally do not list just any assets. They conduct their due diligence. This is why if an asset is listed, it also means that it has passed successfully all the verification procedures and is reliable.
Listing In Traditional Financial Markets
Listing in traditional finance is also very important. It means a process when shares of a company become available on a stock exchange. When a company is listed, its stocks can be bought and sold by traders and the public. This helps to increase the company’s market presence and provides the company with access to capital.
How Companies Get Listed on Stock Exchanges
A company must meet some requirements to be listed on a stock exchange. For example, those requirements can be financial audits and disclosures, compliance with some legal standards, and many more.
Listing on a traditional financial market normally starts with the initial public offering (IPO). During an IPO, the shares of the company are sold to investors, and only after that, traders can trade shares on a stock exchange.
Listing Requirements on Traditional Exchanges
When a company is listed on a stock exchange, such as the New York Stock Exchange (NYSE) or Nasdaq, it has to comply with strict listing criteria. For example, it must prove that it is financially stable. The company must have a specific level of market capitalization and comply with all regulatory norms. This is done to ensure that investors and protected and the market doesn’t suffer.
Listing in the Crypto Market
Listing in crypto means adding an asset to an exchange or a trading platform. One doesn’t need an IPO to list a token on an exchange. But exchanges have their criteria for listing. Listing on an exchange increases the asset liquidity and normally, leads to a sharp growth of the asset price.
What Exchanges Can List Crypto Assets?
Any exchange can list a crypto asset. The most important exchanges for listing are Binance, Kraken, and Coinbase. The most important decentralized exchanges are Uniswao and PancakeSwap.
Each exchange has its own requirements for assets. This is why it is important to check them before you apply for listing your asset on one of the exchanges.
How Exchanges Add New Crypto Assets
When a team wants to list their asset on an exchange, they submit a request to that exchange. The exchange checks whether the asset complies with all requirements. If yes, the exchange lists the token. If not, the exchange may inform the team what else is needed to list the asset.
The most important criteria that exchanges check are:
- The project’s legitimacy
- Security
- Trading volume potential. However, exchanges may have other requirements, too.
Stages of Crypto Listing
You have to pass the following stages before your asset is listed.
Develop the Project and Launch the Token
First, create a project and launch its token. Develop smart contracts, build a community, and make sure the project complies with regulations.
Choose a Crypto Exchange for Listing
After the project is ready, choose an exchange where you want to list your asset. Centralized exchanges have more requirements and are in general stricter than decentralized exchanges. But listing there can help your project to take off.
The Exchange Reviews Your Application and Token
Now, you wait till the exchange reviews your application and the project. Some exchanges review technical details and even ask for legal audits, only after that, they can list your asset.
Add the Asset to the Exchange
When the exchange approves your listing application, it will add your asset. Now, users can trade it. Some exchanges even announce the listing of a new asset to attract attention, this is why normally, assets start growing in price after listing.
Types of Crypto Listing
There are a lot of types of crypto listing. Here, we will check some of them
Centralized (CEX) vs. Decentralized (DEX) Listing
When we talk about a listing on a centralized exchange, we mean a platform like Binance of Coinbase. They offer high liquidity and are very secure.
When we talk about a listing on a decentralized exchange, we mean listing on platforms such as Uniswap or PancakeSwap. Traders can buy there cryptocurrencies directly from other users. This is why trading on a decentralized exchange is more accessible, but liquidity is also lower.
Free and Paid Listing
Some exchanges charge for listing crypto assets, and others do it for free if the asset complies with their requirements. Paid listings can be very expensive but usually, platforms also market such listings. Smaller platforms normally offer listing crypto for free, but assets don’t get such exposure.
Exchange-Initiated and Project-Initiated Listing
Exchanges may invite projects to list their assets. It may happen if a project is trending and signals that there is a high demand for the asset. But in most cases, projects apply for listing themselves.
Impact of Listing on Crypto Prices
When an asset is listed on an exchange, demand for it surges. This is why traders expect that the asset price will grow after the listing. The asset becomes also more liquid which boosts the interest of bigger investors, and this also fuels the price growth.
Listing has also psychological effects. Investors see that the asset is listed on an exchange and understand that the project complies with all the exchange’s requirements. It means, that the asset is worth attention. Major exchanges have high requirements, this is why listing on a major exchange is considered a sign of project legitimacy and strength.
Price Manipulation Before and After Listing
Some traders manipulate prices before a listing. They buy coins right before listing when their price is still low and sell them after listing when their price grows. This causes the price fluctuations of the token.
Risks and Challenges of Listing
Listing is a positive event, but it comes with some challenges.
High Fees and Listing Costs
Exchanges charge a lot to list a new asset. Smaller projects may not have the money needed for listing.
Delays and Listing Rejections
When a project applies for listing, it doesn’t mean that its token will be listed asap. The review can last long, and some applications are even rejected.
Post-Listing Price Drops
Listing is connected with high volatility. After the initial surge, the asset price eventually drops when early investors sell the token for profit. This impacts new traders negatively.
How Investors Can Use Listings to Their Advantage
If you are an investor, here are some ways to benefit from upcoming listings.
Monitor Listings to Buy and Sell Assets
Monitor the exchange announcements and check what assets are going to be listed. You can consider buying them before listing. Some investors prefer to buy assets after listing and after the asset price stabilizes.
Evaluate the Project's Potential
Before you buy any coin or token, check the project, its use cases, and whether its team is credible. If a project is good, it has a chance to stay for long and its token may grow in price.
Conclusion
Crypto listing is an important stage in the development of each digital asset. The asset becomes more visible, liquid, and credible. But listing is not only an advantage. It is also risky because it can lead to volatility and high fees. If you understand how all the listing process works, you can make better investments or benefit from more opportunities for your crypto project.
