Exchange tokens are not shares

Exchange tokens are much more mysterious than we would like to think.

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At first glance, the theory thatexchange tokens are rightsrequirements for a portion of the cash flow of the exchange seem reasonable. This approach excited many investors, as they could use long-known tools to evaluate these tokens. Based on this, exchange tokens became the first crypto assets with a clear assessment methodology.

However, some particularly insightful analystsnote that exchange tokens are not at all identical to stocks, since legally they do not provide any rights to their owners. From a legal point of view, the rights to a part of the cash flow are not fixed in any way. Moreover, no one knows exactly where tokens are in the capital structure.

In addition to the lack of legal force, exchangetokens also do not provide their owners with rights at the level of the crypto protocol. Without these rights, token holders are forced to blindly trust exchanges that they, in turn, will endow tokens with at least some value.

For cryptanalysts and investors, we did not saynothing new. However, there are less obvious things that have not received proper publicity. There are a couple of theories claiming that the value of exchange tokens stems from dividend payments or mechanisms similar to share buybacks. Both are wrong.

At best, exchange tokens canacquire value as a commodity (rather than a fixed asset), that is, from a certain balance of supply and demand. Nevertheless, even such an approach can be considered far-fetched. The value offer of tokens should be more intelligible so that they can be ranked as commodity assets.

So what exactly are exchange tokens? Favorite “smart” answer - it all depends on the specific situation. For tokens like BNB, this is a bet that the token will become both the main asset in Binance DEX and the money of the Binance ecosystem, serving a wide range of financial services provided by the company.

But not everyone thinks so. Many do not share the vision within which the exchange uses suspicious mechanisms for burning its tokens, which supposedly should increase the value of the tokens remaining in circulation. Even more important, issuers of exchange tokens should pursue a more transparent policy regarding what exactly they are selling. Exchange tokens are not shares, which means they are something completely different.

Based on materials from twitter