The OKEx delisting purge – An indication of what’s to come
The Hong Kong based cryptocurrency exchange, OKEx, have recently delisted several trading pairs with weak liquidity and trading volumes.
As is often seen in the world of cryptocurrency, this latest move was reinforced on Twitter by Head of Operations at OKEx, Andy Cheung, who labeled this move as “housekeeping”, and something which will ensure “a robust ecosystem for our projects to grow.” Over 50 trading pairs were delisted on Oct 31, 2018, however OKEx were keen to make it clear that only the trading pairs with weak liquidity and trading volume, not the tokens themselves, were to be delisted.
Given how OKEx is at this current moment in time, the world’s largest cryptocurrency exchange with fees (seeing a volume of $511,796,394 over the past 24 hours), the tangible and symbolic impact of this needs no upholding. This move will not only send a shudder amongst aspiring ICO’s and altcoins with smaller volumes, but will also potentially change the perception that people have of OKEx – for better or for worse. This announcement interestingly follows OKEx’s listings of four stablecoins earlier this month – TrueUSD (TUSD), USD Coin (USDC), Gemini Dollar (GUSD), and Paxos Standard Token (PAX).
What is to be made of this?
From the very get go, one might argue that OKEx are doing this to ‘all but’ eradicate projects which they see as having little substance – commonly known as ‘s**tcoins’ amongst the crypto community. Opposingly, one can see this as a purely financially motivated move where OKEx are looking to secure their coffers with more cost effective projects. Whatever the reason, two resounding messages have come to the fore as a result – exchanges see a bright future with stablecoins, and low trading volumes will not go unpunished any longer.
Stablecoins have been at the forefront of many people’s attention. It is not uncommon in the market to see swings of anywhere from 5 to 15 percent in a day, and by mimicking full-reserve banking (where an entity holds the equivalent of what it lends), asset-backed stablecoins will theoretically allow people to stay within the crypto ecosystem by incentivising them with a stable price, whilst also offering a quick entry or exit into highly volatile assets. Thus, the potential for sizable trading volumes is evident when it comes to the stablecoin market, so it is no wonder why exchanges like OKEx are starting to pay close attention.
With regards to the countering of low trading volumes, OKEx have set a precedent where low trading volumes will not be ignored any longer, something which will no doubt put pressure on existing projects and ICO’s to use more of their resources to bolster their trading action. So whilst this is Christmas come early for market makers – who are commonly used by many projects to ramp up volumes using an array of covert techniques – the increased performance pressure will potentially hinder the vision and objectives of many a project, who now may feel the need to allocate sparse funds to stabilise their token price.
Inadvertently or not, this appears to contradict the vision of many exchanges.
Top tier cryptocurrency exchanges, as well as charging sizeable listing fees, usually conduct thorough audits to ensure that projects are not scams and have legitimate real world ambitions. OKEx’s stance on blockchain can be seen on their website, where they state that “blockchain technology will eliminate barriers to transactions, increase the efficiency of transactions across society, and eventually have a significant impact on the global economy” and that OKEx will “strive to achieve something that changes the world.” But instead of allowing for innovation to flourish, this latest move may create an environment where mediocrity is tolerated, so long as trading volumes are high.
But as is the case with most updates within the industry, only time will tell what comes of this.