Everything EOS /Rant, 11 Feb 2022

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From YouTube: Token Listings – #EndRant

Description

Yves La Rose demystifies the process around exchange token listings and touches on both the legal and operational considerations that come into play as well as the unique case of #EOS based tokens. #ENF #EOSIO #EndRant

/rant is meant to be a conversational, direct way for Yves to share his thoughts on the issues of the day, and respond to questions and ideas raised by EOS community members themselves.

Where one rant ends, another begins, and the discussion continues.

Let us know what you think in the comments below, and join the conversation on Discord. Perhaps your questions or comments will inspire the next rant!

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A

All right, this is one that I've been wanting to do for a while I've ranted about this so many times, and hopefully this is the last time that I rant about this, but I know that it won't be the last time because it keeps coming back up and it's the idea of token listings.

A

Everybody talks about token listings. Everybody wants their token listed. Everybody questions uh question questions why their token isn't being listed, especially if we're talking about top tier exchanges and uh how difficult uh the token listing process is and then, especially in the eos what we talked about while we've got exchanges that are block producers. So why are they token? Why aren't they listing um tokens, uh eos based tokens or eos native tokens on their exchanges etc?

A

And that's what I want to talk about today and a big part of why I want to talk about this, obviously, where this comes from, and why I see this so frequently is because we have very few eos based tokens listed on top tier exchanges and and why that might be, and what's required for that to happen.

A

So for those who have gone through the process, it's not that it's necessarily complicated, but there are some key pieces of information that are key milestones to achieve before getting a token listed and the first one, typically is the legal opinion.

A

And so you need to go through a reputable and I say reputable somewhat lightly, because every exchange has their own guidelines and or requirements for what is considered reputable uh in terms of uh what they accept in terms of a legal opinion where it comes from. Who can do it, etc?

A

Cetera they've got sometimes they've got preferred partners other times, they've got specific jurisdictions that that legal opinion needs needs to come from um and then there's a certain price point as well uh in terms of what level of um of experience that that either that firm or that lawyer needs to have for them to be comfortable. In accepting that legal opinion, and when I talk about legal opinion, I'm referring back to the idea that you need a legal opinion that showcases that your token is not a security.

A

So that's generally the idea, and sometimes you need more than one legal opinion you need. For example, I know of one exchange that you need a legal opinion based in the united states and you need one from the jurisdiction in which your company or your token, is registered in uh and others.

A

You just need one and oftentimes it's from the united states and then the law firms that are producing these opinions can't just be any law firm, so oftentimes, especially if we're talking about the top tier exchanges that law firm needs to be of a selected group of law firms or of a certain reputation where they've done. You know a lot of these before and essentially the idea is that, should that be challenged, should that opinion be challenged because, again, going back?

A

These opinions are a uh a essentially a kind of a research uh based on your project based on what they know, based on what you tell them, and they do a bunch of research and it's an opinion. So it's not it's not it's not a certification.

A

It's an opinion that, based on you, know, xyz criteria based on all the information that we got, that you know to the best of our knowledge, and we are reputable offering and we've done a lot of these and, if ever we're being called, we will be able to go and defend our opinion, et cetera, because they're putting their stamp of approval on this essentially they're, putting their reputation online that we deem this token not to be a security.

A

Therefore, uh from a regulatory standpoint you, um the exchange, uh uh should feel comfortable in listing this token, so that process is is expensive, uh as you can, as you can imagine, uh I've seen legal opinions ranging from five thousand dollars to fifty thousand dollars, but I've seen the five thousand dollar legal opinions are rejected.

A

More often than not, and the fifty thousand uh dollar give or take us dollar uh opinions uh accepted more often than not. That's just your first uh step, that's just after you've engaged with them. They might be interested you've, given a deck of what your project is. You've shown them, how much volume you have the size of your community. Your milestones, how much funding you have etcetera, etcetera, etcetera, there's a bunch of stuff before that.

A

But let's assume that you're in a position where the exchange deems that yes they're they're, at least interested in looking at whether or not they should uh they'd like to list you, because there seems to be a right fit there and it's going to be beneficial for both parties. Get your legal opinion done got that done. I've got listing fees, people often complain about listing fees and the listing fees depending on the exchanges uh can range and depending on the market, we're in so obviously in a hot market.

A

uh Their resources are limited, so they need to. You know it's supply and demand, and so they need to choose where they want to dedicate their their human resources and obviously the highest bidder. Just like in any other market. It's a free market, then you know, prices go up in order to filter out so there's less applications just a standard. But let's, let's say that applications typically will range between between six hundred thousand us dollars to I've.

A

Seen up to two million dollars a little over two million dollars for for an application for a token project and those funds, people complain. What are those funds going for? Well in large part, it's marketing um another big part of that, obviously, is the staff required to do the research? There are people on the other side. These exchanges are doing research on your project and, ideally, if you've ever gone through this process, the idea is that both parties want to win. Both parties want to get something out of this.

A

They want yours, so they being the exchange want your listing to be successful. They want all eyes to be on your project. They want people to see that they've now included your community in this, because again, it's kind of on boarding, the community onto their platform, and so there are costs of that. There's a marketing team. There's the legal team they've got to do their reviews and then there's a big part of this is the devops team, the engineering team- and this is where I think people need to understand.

A

This is where my rant really gets pointed to specific to eos. Is people question why it's so easy to get erc20 tokens listed and why it's so difficult to get eos tokens listed completely different machines completely different pieces? At this point, all the exchanges have devops scenes and they've got engineers that are comfortable with the erc20 token standard. It's a standard so adding an extra project on there.

A

All their api calls all of the work that they need to do in order to to have the necessary infrastructure in place and and monitoring tools, etc in place to be able to accept tokens, adding one more to the list, I'm running out of time, adding one more to the list is actually pretty easy, whereas in eos it's quite complex, the performance of eos requires a specific skill set and so oftentimes.

A

They need to to hire extra staff, that's capex on their end and so to justify that they definitely need the volume they they need. The transaction fees and a lot of the times the the the projects in eos have not been able to.

A

I guess showcase the amount of transaction volume or the 24-hour volume that would be justified for the exchange to list this token in great part, because there are economics, these are businesses, and so the idea is that they need to be able to generate enough cash flow to be able to pay for the extra staff and and to pay for everything.

A

So that's that's the second part of things, that's the listing fee and then, on top of that, typically, you have market making fees and those market making fees are where often times in eos they're, a big roadblock on top of the listing fee for the projects, because market making fees can range between again, maybe five, ten thousand dollars a month to thirty forty fifty thousand dollars a month, and so all of that combined is why you see way more erc20 tokens listed, because it's so much easier, and you say you see very few tokens listed on eos because it's more complex in large part.

A

What we have in other ecosystems are foundations that have been able to come and help these projects get listed. And once you have a certain amount, then it's much easier for the exchange to follow through afterwards. But it's not going to remove the legal requirements for the legal opinion letter. It's not going to remove the actual cost for the exchange to market the listing and and to actually pay the staff to to onboard the the apis or or all the technical requirements to list etc.

A

And that's the ram today: it's it's not that easy and we're working towards that. That is something that the foundation will be able to come and help support.

B