BitMax.io (BTMX.io), an industry-leading digital asset trading platform, listed THORChain (RUNE) on September 22nd, 2019. As of December 12, 2019, the market price of RUNE has increased by roughly 900%. An in-depth review has identified multiple critical factors contributing to RUNE’s staggering price appreciation over last three months in an otherwise lukewarm crypto market.
- BitMax.io, Historical Success from Top-Tier Listings
BitMax.io (platform native token: BTMX) is a Singapore-registered digital asset trading platform servicing retail and institutional clients across the globe. The platform currently has 82 digital assets listed with access to over 190 trading pairs.
RUNE is not the first token that experienced impressive price action post the listing on BitMax.io.
Two of the platform’s primary listings, LTO Network (LTO) and Algorand (ALGO), experienced all-time highs of 816% and 35% relative to their opening prices soon after trading opened on BitMax.io.
Another top-tier project, ABBC, listed on BitMax.io and experienced an approximate 2x in price movement, from $0.18 to roughly $0.36, within a few days after the listing on May 7, 2019.
Fusion (FSN) and Drep Project (DREP) also saw similarly explosive price action shortly after forming a partnership with BitMax. The price of FSN increased by roughly 35% in the first 24 hours following listing on May 9, 2019, while the price of DREP increased by over 70% in the four days following an official announcement of its listing on BitMax.io.
- RUNE’s Robust Utility & Go-to-Market Strategy Identified as Key Success Factors
RUNE has outperformed most tokens in the market since its debut on BitMax.io in late September of 2019. While determining the rationale behind price action is notoriously difficult in the digital asset ecosystem, many argue that an asset’s fundamental value (i.e., the ability of the asset or its associated blockchain network to provide utility) is the critical determinant of a project’s long-term success and price.
“Projects that can showcase clear linkage between their token’s utility and a revenue-generating business model are those tend to capture the attention of the market and perform well following listing,” notes Shane Molidor, Global Head of Business Development at BitMax.io.
Accordingly, a shortcoming of many test-net tokens is their failure to provide legitimate investment rationale to mobilize profit-motivated traders – most test-net tokens lack clear utility and are therefore purely speculative. In the absence of utility, these projects attempt to create momentum after listing on an exchange with lofty promises of future value the tokens will carry once mainnet goes live.
Molidor notes that despite Thorchain’s core offering, BEPSwap, still operating in beta, the team went to market with a cleverly designed incentive structure to promote RUNE’s utility narrative:
“Once launched, BEPSwap will have clear utility and RUNE will play a central role in its operation; however, the reason we elected to list RUNE was the system of incentives the team put in place prior to BEPSwap’s launch. These incentives were designed to give RUNE intrinsic value in the immediate term and have contributed to Thorchain’s explosive growth and industry presence in the past few months. We recognized very early on in our due diligence process that the Thorchain team was laying the foundation for future success, whereas many projects seem to neglect this aspect of a go-to-market strategy.”
In referencing a “system of incentives,” Molidor is alluding to RuneVault, a novel staking interface launched by Thorchain which allows RUNE holders to stake RUNE and earn weekly token rewards until the launch of BEPSwap. As of December 12, 2019, over 80% of the total supply of RUNE has been staked on RuneVault.
With regard to project listing criteria, BitMax.io also has unique standards.
“Our listing criteria have evolved in the past year and we’ve certainly learned from past successes as well as missteps,” notes Molidor.
Similar to other top-tier platforms, BitMax.io has publicly stated that it employs a due diligence matrix to assess a number of variables including a project’s core value proposition and business plan, token economic design, smart contract, community support, as well as the team’s professional background in their review of potential listing candidates. Where BitMax.io is unique is that it requires projects to employ a listing strategy that includes both marketing and liquidity support.
In support of these requirements, Molidor stated: “I strongly believe this holistic approach to listing is critical to fostering engaged project communities and efficient trading in the marketplace. Fundamentals can certainly be key drivers of a project’s success, but mature projects recognize the value of leveraging the support of external agencies such as marketing firms and designated liquidity specialists to round out their go-to-market approach.”
- Centralized Trading Platforms May Catalyze Project Success
While RUNE was indeed listed on decentralized platforms (“DEXs”) as early as July of 2019, BitMax.io was the first centralized trading platform to list the token and remains the only centralized portal for users to access the RUNE as of publication.
While the main role of a trading platform or “exchange” is to facilitate trades between buyers and sellers, a centralized trading platform’s role in promoting success for projects should not be understated. Centralized trading platforms can offer significant value-add to a project and may compliment a token’s utility and fundamental value as a catalyst for token price appreciation and other success factors. Some of the key value propositions centralized trading platforms offer to projects are:
- Facilitation of Price Discovery
- Verification of Fundamental Value / Utility
- Contribution to Community & Network Growth
- Facilitation of Price Discovery:
Price discovery refers to the process of determining the appropriate price for an asset. Top-tier centralized trading platforms facilitate efficient price discovery given their ability to attract liquidity from a diverse range of professional trading institutions as well as retail communities. The presence of more robust and resilient liquidity allows both buyers and sellers to trade with minimal market impact as they assess a token’s fundamental value – determining whether it is overpriced or underpriced. Illiquid markets, such as the order books hosted on many DEXs, are prone to significant market movements resulting from even small trades. In this manner, a lack of liquidity convolutes the price discovery process and makes any assessment fair value incredibly difficult for traders.
Efficient price discovery is an important marketplace characteristic to attract sophisticated investors and utilitarian traders that may otherwise be unwilling to trade a token if there is uncertainty as to whether or not the asset is significantly underpriced or overpriced.
Thorchain’s listing of RUNE on BitMax.io provides a quality use case to assess growth in liquidity as the token transitioned from a DEX to a centralized trading platform. Prior to listing on BitMax.io, RUNE’s average 24-hour trade volume on Binance DEX was roughly $24,000. Since listing on BitMax.io, average 24-hour volume for RUNE has increased to roughly $350,000, representing a 1,355% increase (>14.5x). A significant portion of this trade activity occurs on the BitMax.io RUNE/USDT order book. While trade volume and liquidity are not synonymous, the two metrics are highly correlated.
2. Verification of Fundamental Value / Utility:
Given the robust due diligence process employed by most top-tier centralized platforms, many prospective investors and traders use a platform’s decision to list a token as a signal to legitimize an asset’s fundamental value and utility. While it must be cautioned that centralized trading platforms are not investment advisors and do not provide guarantee on the future price performance of assets they list, many speculators rely almost exclusively on listing announcements as buy (and sell) indicators.
The popular phrase “When Binance?” is a testament to this. The phrase gained widespread popularity in 2018 due to waves of buyers that would flock to purchase a token after Binance announced trading support for the asset, subsequently driving significant price appreciation. The excitement and buy-side imbalances associated with Binance listings is a recognition that Binance’s listing process is highly selective; therefore, speculators deduce that only the highest quality projects can earn listing accolades on the platform.
3. Contribution to Community & Network Growth:
Many centralized trading platforms service thousands of users (millions for some). Listing on a centralized platform grants tokens direct access to the platform’s userbase. Although the most active platform users tend to be profit-motivated traders, many utilitarian investors (i.e., participants that trade assets because they expect to obtain some benefit from trading besides trading profits) trade on exchanges to access tokens to then use for their intended purpose (such as staking or platform payment). Gaining exposure to utilitarian investors is important for projects in their pursuit of evolving network value.
Additionally, many platform users that trade a newly listed token will integrate themselves into the project’s existing community via social media channels or offline meetups. These platform users will often catalyze important discussion and debate within the project’s community – sometimes in pursuit of a trading edge, while other times just to quench intellectual curiosity. Regardless of their intention, contribution to the project’s underlying community most certainly carries some value.
4. Future Collaboration between Thorchain & BitMax.io to Create Synergies
RUNE’s staggering price appreciation of >900% despite the bearish sentiment in the market is a testament to Thorchain’s ability to promote token utility and catalyze network growth prior to the project’s release of their core product, BEPSwap. As the first centralized trading platform to list RUNE, BitMax.io’s has likely contributed in the project’s recent success by facilitating efficient of price discovery, verifying the tokens fundamental value, and assisting with community & network growth.
BitMax.io has also announced plans to provide further value to the Thorchain ecosystem by integrating with the BEPSwap network. With regards to this next aspect of collaboration, Molidor noted: “We are excited to further contribute to Thorchain’s success as an exchange partner to BEPSwap. Allowing BitMax.io users to stake BEP2 assets on our platform not only grants them staking rewards but will also make BEPSwap’s continuous liquidity pools more robust, which will ultimately make BEPSwap’s business use case more compelling to end users. This next stage of partnership between BitMax.io and Thorchain will certainly help evolve RUNE’s utility even further.”
 Data retrieved via Coinmarketcap.com as of December 12, 2019.