Solving the chicken and the egg: How Totle will cure the scourge of listing fees
The subject of centralization is a source of ongoing controversy in the cryptocurrency space. The most obvious examples are the centralized exchanges that most crypto consumers rely on. While Bitcoin was conceived as a means of wresting control of the financial system from centralized entities and putting it in the hands of the people, the technical know-how required to operate a full Bitcoin node or even control a set of private and public keys is beyond the scope of the average user. As a result, most crypto consumers entrust their wealth to unregulated, hacker-prone centralized exchanges — the same way they entrust their fiat currency to centralized banks.
Recently, a war of words between Binance CEO Changpeng Zhao (a.k.a. CZ) and Cristopher Franko, co-founder of Expanse, an ICO project looking to list its token on major exchanges, raised another concern surrounding centralized exchange: the exorbitant fees that teams are paying to list their tokens on cryptocurrency exchanges.
This latest in a long line of spats between Franko and the defiant CZ reportedly began when Franko leaked an e-mail he had received from Binance demanding 400 BTC, roughly equivalent to $2.5 million, in exchange for listing Expanse on Binance. Despite CZ’s vehement protestations, alleging that Franko had in fact forged the email in question, many took to Twitter to lament crypto’s dependence on Binance and other centralized exchanges. And the media took notice.
But while Binance received most of the media’s attention, the problem of excessive listing fees is by no means confined to the Taiwan-based giant. Earlier this year, Ripple caused a major stir when rumors began to surface that they had offered Coinbase $1 million for a listing. Coinbase rejected the proposal and has still not listed Ripple’s XRP settlement system. Nevertheless, the market climate which prompted Ripple to make the offer in the first place is a rather disconcerting derivative of the power concentrated in centralized exchanges.
A recent study by the research firm Autonomous Next determined that the market price for listing a crypto token on an exchange varies between $1 million and $3 million based on the strength of the project. Compared to the $125,000 — $300,000 it costs to list traditional equities on Nasdaq, these figures represent a gross abuse by exchanges of their role as gatekeepers of liquidity.
Indeed, according to Michael Jackson, a partner at venture firm Mangrove Capital, “the exchanges are where the liquidity is — it’s where the money is — so that’s where the power is just at the moment.”
The listing fees controversy is just one example of the hazards inherent in centralized crypto trading. Vulnerable to both malicious hackers and government intervention, the first generation of crypto exchanges serve as a single point of failure to the ecosystem as a whole.
For their part, decentralized exchanges (DEXs) which allow users to control their private keys are becoming increasingly frictionless and pleasant to use. However, DEXs face a chicken-and-egg problem. Namely, while they need adequate liquidity to satisfy the demands of their customers if they are to convince the customers to make the switch from centralized exchanges, the initial liquidity needs to originate somewhere. As it stands, the current lack of liquidity makes DEXs unattractive substitutes for centralized exchanges.
Enter Totle.
By aggregating DEX liquidity on one platform that is intuitive and pleasant to use, Totle is ushering in the era of second-generation crypto exchanges.
