Exchange Coin: A Comprehensive Guide to Crypto Issued by Cryptocurrency Exchanges

An exchange coin is a crypto issued by a cryptocurrency exchange to serve different utility functions within the exchange's ecosystem. The coins, sometimes called exchange tokens, offer users various benefits including staking rewards, discounts on trading fees, and access to special features and services.

An exchange coin is a type of cryptocurrency issued by a crypto exchange. The coins, sometimes called exchange tokens, serve different utility functions within the issuing exchange’s ecosystem.

For example, most exchange coins offer users discounts on trading fees when used to pay for transactions on the exchange. BNB (BNB), for example, provides reduced trading fees on the Binance platform.

Another common utility is staking, where the users can stake their exchange coins to earn rewards, including extra coins or tokens, or participate in different exchange activities, like voting on new token listings.

Owning exchange coins mostly gives the users access to special features or services on the exchange, including premium customer support or participation in token sales known as initial exchange offerings (IEOs).

Some exchange coins are used for several other purposes, including collateral for loans, cross-platform transactions, or as a base trading pair for other cryptos, despite this being a rarer use case.

While the terms ‘token’ and ‘coin’ are mostly used interchangeably, the truth is their exact use cases differ slightly.

Everything comes down to whether a crypto is the native coin of a blockchain or is powered upon it based on a preset token standard.

For example, BNB is the native crypto of the BNB Smart Chain, the blockchain that underpins the Binance exchange. As the exchange coin is native to the network and used to pay the gas fees, it must be perfectly classified as an ‘exchange coin.’

Then, there is the KuCoin Token (KCS), the exchange “coin” of the KuCoin exchange. As KCS is an ERC-20 token running on Ethereum, it should be correctly defined as an ‘exchange token.’

Later in a project’s life cycle, this project’s team might develop its blockchain and migrate its existing exchange token to the native network.

For instance, the Crypto.com exchange coin Cronos (CRO) started as an ERC-20 token on Ethereum. Nonetheless, in November 2021, the project moved the token to the Cronos blockchain, currently operating as a native coin.

It is a dichotomy existing within the crypto sector. For instance, Ethereum is a coin that operates as the native currency of the Ethereum network with which gas fees are paid, while Tether (USDT) is an Ethereum token that runs on the network as somewhat of a tenant.