Are mainstream platform tokens an ideal investment target? The performance of the top 3 platform tokens last year far outperformed Bitcoin.

Looking back at 2019, how did the "platform tokens" of various mainstream cryptocurrency exchanges perform? For cryptocurrency investors, are platform tokens an ideal investment target or a means of risk diversification? Did their returns last year outperform other cryptocurrencies?

Cryptocurrency exchanges have become a major pillar of the crypto industry, bridging the gap between traditional finance and the crypto sector. As a result, "exchange tokens" have become a key aspect of long-term development for various exchanges.

Exchanges such as Binance, Huobi, OKEx, KuCoin, among others, continue to expand the real-world applications of their exchange tokens, offering advantages like profit-sharing to attract users, which often reflects in their token prices.

Review of Exchange Tokens Performance

Reports indicate that in the past year, OKEx's OKB token led with a 317.9% return rate, followed by Huobi's HT (170.8%), Binance's BNB (121.4%), and KuCoin's KCS (73.9%).

It is evident from the chart that BNB outperformed its competitors in the first half of the year, but with the cooling of Initial Exchange Offerings (IEOs) and the decline in Bitcoin from its yearly high of $13,000, BNB's performance weakened while other exchange tokens continued to rise, with OKB excelling until the year-end.

The following chart replaces KuCoin's KCS with Bitcoin for comparison, showing that Bitcoin's performance was not as strong as the top three exchange tokens at various stages, ultimately yielding a return rate of 121.04%.

Reports suggest that the price fluctuations of exchange tokens may be based on several potential factors and the growing actual use cases.

Use Cases of Exchange Tokens

Under competitive pressure, exchanges are making efforts to develop their ecosystems. Binance's BNB initially attracted users with a simple function: offering trading fee discounts.

In addition, Binance determines the level of participation in IEOs based on the amount of tokens held by users and uses its profits to repurchase and burn BNB, which are potential appreciation factors.

While Binance is widely seen as a leader in the crypto market, some exchange tokens have surpassed the above use cases, such as OKB, which had the highest increase in value last year.

According to the monthly report released by OKEX (source), OKB has both internal and external use cases. In addition to OKEx Jumpstart platform and trading discounts, internal use cases include governance and various external use cases:

• Cybersecurity: Collaborations with cybersecurity companies such as Slowmist, Beosin, and Certik allow the purchase of cybersecurity solutions with OKB.
• Financial services: Partnerships with 14 crypto platforms including BitKan, Bitpie, QLC Chain, Q-Wallet, Ledger Vault, Machi X, Kcash enable users to deposit, pledge, and loan cryptocurrencies with OKB.
• Travel: Booking over 450,000 hotels worldwide on Tripio using OKB.
• Shopping: Shopping on Cryptomall, a cryptocurrency marketplace with over 10 billion products, using OKB.

From the above list, it is clear that exchange tokens have continued to add practical use cases, whether to gain a competitive edge in price or for other motives, as their actual use cases continue to grow.

Regular Burn, Supply Reduction

As mentioned earlier, Binance's BNB token's repurchase and burn process effectively reduces its supply, increasing the scarcity of BNB over time.

Since May last year, OKB has burned a total of 5.9 million tokens, totaling 13.9 million tokens (5% of its total supply) repurchased and burned.

With the recent significant rise in Bitcoin, competing altcoins and exchange tokens have also been on the rise. Among the exchange tokens mentioned in this article, BNB performed the best, with a 9.75% increase in the past 24 hours, while Bitcoin Cash (BSV) surged by 101%, surpassing Bitcoin Cash (BCH) to become the fourth-largest by market capitalization.

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