Changpeng Zhao, former CEO of Binance, stated that the process of listing tokens on centralized exchanges (CEX) is flawed. According to him, greater automation, similar to that of DEX, could prevent speculation and improve market fairness.
Let’s see all the details in this article.
The former CEO of Binance highlights the shortcomings in the token listing methods of centralized exchanges (CEX)
As anticipated, Changpeng Zhao (CZ), co-founder and former CEO of Binance, recently questioned the process of listing tokens on centralized exchanges (CEX), describing it as imperfect and in need of reforms.
According to CZ, the current system has vulnerabilities that can favor market manipulations.
In particular, it highlights how the short interval between the announcement of a listing and its actual implementation allows more experienced traders to speculate on decentralized platforms (DEX), causing significant price fluctuations.
In fact, when a new token is listed on a CEX like Binance, the market reacts immediately.
The announcement generates expectations, causing the price of cryptocurrencies to skyrocket on the DEX, where the fastest investors manage to buy it before it is officially listed.
Within a few hours, many of these traders resell the tokens once they are available on centralized exchanges, generating strong selling pressure and often causing drastic price drops.
This phenomenon occurred recently with the token TST, an asset created for testing purposes on the BNB Chain and which, despite not being intended for trading, reached a market capitalization of 489 million dollars before collapsing by over 50%.
The advantages of an automated listing system
To tackle this problem, CZ suggests reforming the listing system of CEX by drawing inspiration from the automatic mechanisms of decentralized exchanges.
In particular, it proposes a model in which the listing of tokens occurs in a more transparent way and without manual interventions, thus reducing the risk of bull and bear speculations and manipulations.
According to him, the adoption of an automated listing system could offer several advantages. Such as greater fairness, as all investors would have access to the information at the same time.
Furthermore, there would be fewer manipulations as speculative operations that exploit the current pre-announcement system and more efficient processes would be reduced.
By eliminating manual intervention, CEX could improve the speed and transparency of their operations.
However, CZ also clarified that he no longer has any active role in Binance’s decisions, thus leaving the reins to the new executives of the exchange to make any changes.
The TST case and the effect of ‘influencer’ on cryptocurrencies
As mentioned, the example of the TST token demonstrates how the cryptocurrency market is influenced by social dynamics.
The name of the token had been mentioned for a few seconds in a tutorial video on the BNB Chain platform, but this brief exposure was enough to trigger a massive speculation.
Chinese influencers have started to promote the token, quickly bringing it to a record capitalization before the bear.
This event has sparked the debate on the need to better regulate the dissemination of information regarding new cryptocurrencies to prevent similar phenomena in the future.
In any case, in addition to the reforms proposed by CZ, some experts believe that the future of cryptocurrencies could move towards more equitable distribution methods. Thus reducing the importance of centralized bull and bear listings.
A recent example is the launch of the token Hyperliquid (HYPE), which has inaugurated a new paradigm in the sector.
Instead of being listed on a centralized exchange, HYPE was distributed through a decentralized airdrop directly on the blockchain, involving the community in a more fair and transparent way.
This strategy has attracted the attention of many analysts, who see in it a valid alternative to traditional listing processes, often criticized for being opaque and easily manipulated.
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