Meme Coin Dilemma for Crypto Exchanges - The Risk/Reward

The crypto exchanges have a huge influence on the direction of the crypto ecosystem. Via incentives, bounties, Initial Exchange Offerings, they can help projects to reach more audience quite easily.

Considering the sources of income, crypto exchanges are fed with the maker/taker fees that are generated through activities in crypto exchanges. Moreover, the paid listing can be really profitable for them especially when they are allocated some percentage of coins and a budged is reserved for marketing. While they can consistently grow and make profit, the numbero f comptetitors in crypto increases in daily basis. Thus, they are required to find some ways to diverge from the other.

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At that point, they are taking steps and gearing up the risks that they take. Listing Scam coins like Bitconnect or enabling LONGX-DOWNY coins were not the wise choices though they served nicely in the short term.

Are Meme Coins the New Risky Listings for CEXs?

Let's forget about today's market condition and project a bear market that comes in a sneaky way. While there are tens of projects that require the native coins for transactions (ETH transaction fees; WAX Staking; HIVE for account creation for Splinterlands etc.), these coins are losing a decent portion of their value although there is a genuine buy pressure. However, such meme coins, I call them community tokens, are driven by hype and amusement of the hodlers until they are done with the party. When the hype decreases and the market looks depressed, why would any meme coin holder resist a severe bear market? No logical reason for that...

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The risk of flash-crash

The case of Squid Game token has still its effects on the market and social media. The waves of FUD may bring new cases of Squid token before any other person dumps the coins on the others. Moreover, I believe that these meme coins are overpriced and the newly generated childish baby or real versions of them do not make any sense at all. Lose-Lose 🙃

What about regulations?

While it is a burden for policy makers to acknowledge that Bitcoin, Ethereum, Hive, AVAX, SOL, RUNE et... coins are building and evolving to create a new ecosystem that is secured by blockchain technology, the meme coins may take things harder for crypto projects get approval.

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Thailand Banned Meme Coins & NFTs

I just compare the cases with Reddit's WallStreetBets group and the way the guys are being approached. I do not assume any different future for the meme token community when the things get serious.

In the bad scenario; will they be delisted?

Maybe these phases are some looong steps that might be taken but delisting is not something surprising in crypto. Remember how Up N Down coins were suddenly delisted + more interestingly, XRP was delisted by many exchanges within a couple of days. X-R-P!. While the rules of survival is such a risky for the outlier projects, I keep this posibility in my mind for the mid term.

To Sum up,

Meme coins are like friends in your good days, while the market is green, they serve to make you happy. However, what if the bear market comes? Will they still go up in price and in terms of the holders?

Unfortunately, they have not enough narrative to stay alive in a harsh crypto winter. They have no unique buy pressure that will make people buy and spend, stake or use for specific purposes. Moreover, they are hard to be seen as regulation friendly; no purpose, doubtful intrinsic value and very short history... I believe that the exchanges take serious risks to utilize the liquidity and hype of these coins in the short term. However, the meme coins my bring them some extra issues with regulations, extreme price volatility and the decreasing popularity.

Is it worth taking the risk?
Without any roadmap for this temporary hype, it is not. 🐱‍👤

Posted Using LeoFinance Beta



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