Exchange tokens benefit as centralized exchanges battle with DeFi platforms

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Fresh institutional and retail investor inflows into the cryptocurrency market have led to bull market conditions for many top tokens from blue-chips like Bitcoin (BTC) and Ether (ETH) to more recently established DeFi projects like AAVE and Synthetix (SNX).

Exchange tokens are another easily overlooked sub-sector of the market but they have been performing exceptionally well in 2021 as increases in trading volumes results in a larger pool of fees to collect when the exchange’s native token is used for settlement. Native exchange tokens are also typically used as the base pair for funding new listings and token buybacks.

Here are three of the top-performing exchange tokens in 2021 that continue to see upside potential as new investors flood into the market.

Similar to the experience of CryptoKitty users in 2017, the decentralized finance community has discovered that the main drawback of increased usage of the Ethereum network is high gas fees and long transaction times.

As a result, centralized exchanges and their associated native tokens have seen renewed interest as new features like staking, yield farming and collateralization allow investors to profit from holding their investments. These new offerings also allow investors to participate in DeFi-like offerings without worrying about impermanent loss and they also receive access to the latest coin listings.