Exchange cryptos generally do not see much hype, and they aren’t that widely discussed. However, I believe it is a good idea to consider these cryptos. These crypto projects provide significant utility compared to most other projects, as users rely on them to exchange their cryptos and pay gas/exchange fees. Many of these cryptos also have their own ecosystems that drive demand.
However, the most important catalyst for these exchanges cryptos is the anticipated upcoming altcoin season. The altseason is when Bitcoin’s (BTC-USD) dominance declines, and traders pile into alternative crypto coins and tokens. The best way to trade these altcoins is through these exchanges. As such, this cycle ends up driving up the valuations of exchange cryptos. So, I think it might be a good idea to have exposure to these tokens if you think the altcoin space is poised to heat up.
Binance Coin (BNB-USD)
Binance Coin (BNB-USD) is the native cryptocurrency issued by the Binance exchange. BNB was created in 2017 as a utility token, offering users discounted trading fees on the Binance platform. Since its launch, the utility of BNB has expanded to include online services, travel bookings, and entertainment. However, most of its demand comes from exchange fees, and users transacting on the Binance blockchain who pay gas fees with BNB.
The exchange has been scrutinized ad infinitum recently. However, I believe this scrutiny could have a positive impact on Binance in the long-run. Its ex-CEO Changpeng Zhao pleaded guilty to money laundering charges and was sentenced to four months in prison.
Moreover, the company agreed to pay a settlement of $4.3 billion to resolve the charges, while Zhao agreed to pay a $50 million fine. That said, all that controversy is serving as a good incentive for Binance not to turn into the next FTX. I believe a new crypto rally will likely increase demand for BNB. It is one of the most popular places people go to trade altcoins, and the chain itself has thousands of tokens. Binance also does quarterly burns. The latest token burn saw the removal of 2,141,487.27 BNB tokens from circulation, equivalent to approximately $636 million in USD.
OKB (OKB-USD)
OKB (OKB-USD) is a token released by the OK Blockchain Foundation and Maltese crypto exchange, OKEx. As you may have guessed, OKB is mainly used to pay trading fees. OKEx is one of the largest crypto exchanges in the world, and using the token allows users to realize smaller fees when they trade.
OKB is an ERC-20 token and is also a coin on its own OKExChain. However, the OKExChain is a pretty small ecosystem. Most of its demand is due to the OKEx change. OKX is now the world’s second-largest crypto exchange and has been growing very fast. It also eyeing a U.S. rebrand and trying to get more market share in the U.S. crypto market. I believe as long as the exchange continues the aggressive expansion, the OKB token could see significant gains.
Uniswap (UNI-USD)
Uniswap (UNI-USD) is a decentralized crypto trading protocol that allows users to trade crypto without the use of an intermediary. Uniswap’s native token is called UNI. UNI tokens enable shared community ownership, and holders can vote on key protocol changes. It is the biggest decentralized exchange on the Ethereum (ETH-USD) blockchain. Most altcoins that are traded on Ethereum are done through Uniswap.
Unlike centralized exchanges, users do not have to perform know your customer (KYC) checks or any verifications. Additionally, traders can transact through MetaMask and other popular Watters. Uniswap is a fully decentralized and open-source platform, so I would argue it is much safer than centralized exchanges in many respects.
I believe the upcoming altseason could cause a surge of trading activity on the Ethereum blockchain. The Ethereum protocol also supports Binance Smart Chain and many layer 2 networks based on its blockchain. As such, I think there is significant upside potential for UNI over the long-term.
On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
