What is an exchange token?

The latest developments of exchange tokens in 2025

The exchange token landscape will significantly evolve in 2025, with several key developments reshaping the market:

• Market Leader：
  | Token | Market Cap |
  |——-|————|
  | BNB | $94.43B |
  | LEO | $8.21B |
  | BGB | $5.69B |
  | GT | $2.27B |
  | KCS | $1.43B |

Enhanced Utility Beyond Trading The exchange token has now surpassed its native platform and become a payment method. Binance Coin is accepted by many Shopify merchants, while platforms like Gate provide Visa cards, allowing tokens to be spent at any merchant that accepts Visa.

Governance Evolution Most major exchange tokens now have advanced governance mechanisms that allow holders to participate in key platform decisions through voting rights.

• Yield Generation The exchange token has become the core of the DeFi ecosystem, offering competitive APY staking opportunities compared to traditional financial options.

The exchange token market shows enhanced maturity in 2025, with tokens evolving from simple utility tools to multifunctional assets that connect centralized exchanges and a broader financial ecosystem.

What is an exchange token?

TL: DR

Traders on such platforms need to pay for the cryptocurrency trading services provided, and cryptocurrency exchange tokens facilitate these transactions.

Exchange tokens can be used to pay for services and hedge risks during market downturns in the crypto exchange ecosystem.

To increase the value of their native exchange Token, some exchanges adopt various strategies, the most common of which is Token buyback.

Exchange tokens are typically used to pay for transactions, listings, withdrawal fees, and more. Exchanges often offer additional discounts or rewards to users who use their exchange tokens to pay for various fees within the ecosystem.

Introduction

Cryptocurrency exchanges connect buyers and sellers, making the trading of these digital assets easier to achieve. Cryptocurrency exchanges often play the role of stock exchanges and banks in a digitalized model. Traders on these platforms are required to pay for the cryptocurrency trading services provided. These payments are difficult to initiate using fiat currencies or cryptocurrencies such as Bitcoin. In this regard, exchange tokens come into play. Exchange tokens facilitate the exchange and trading of cryptocurrencies through simple payment methods – this is a one-sided model. Payments are made in the form of the exchange’s native coin.

What is an exchange token?

Exchange tokens can be used to pay for services and hedge risks during market downturns in the cryptocurrency exchange ecosystem. When used alongside the exchange’s tools and products, these tokens also provide various bonuses and benefits. Most exchanges generate tokens on the blockchain of other projects, most commonly Ethereum. Exchange tokens are a rapidly growing type of digital token issued by legitimate infrastructure projects and operating businesses, which increases their credibility.

The operation principle of exchange tokens

Exchange tokens are loyalty and reward programs issued by exchanges. Some industry professionals liken them to airline miles. The difference is that exchange tokens can be traded on multiple exchanges, and they are viewed not only as platform coins but also as investments. To increase the value of their native exchange tokens, some exchanges adopt various strategies, the most common of which is token buyback. Exchanges commit to using a portion of their commission revenue or profits to repurchase tokens from users and then destroy them, thereby reducing the circulating supply. Some exchanges, such as Kucoin, have committed to reducing the supply of their exchange tokens from 200 million to 100 million through buyback programs.

The difference between coins and tokens.

In the crypto space, the terms coin and token are often confused, but strictly speaking, there are differences between the two. This is why we say exchange tokens instead of exchange coins. A crypto token is a cryptocurrency that represents an asset with a specific purpose on the issuing platform. Existing blockchains are typically used to create tokens. The creation of tokens takes utility into consideration, allowing users to access and use a broader crypto economic system. Most tokens are designed for decentralized applications or dapps. Tokens are not intended to serve as a store of value in and of themselves. Instead, they work in conjunction with the software they were developed with. For example, ERC-20 tokens are designed to run on the Ethereum system and blockchain.

The advantages of exchange tokens

The tokens based on cryptocurrency exchanges primarily provide liquidity to the exchange. The increase in liquidity on cryptocurrency trading platforms often also promotes an increase in their trading volume. A large trading volume increases the marginal trading fees of the platform, thereby overall increasing the revenue of the cryptocurrency exchange.

Cryptocurrency exchanges use exchange-based tokens to reduce trading fees. When traders use tokens instead of fiat currency or other cryptocurrencies to pay transaction fees, they can obtain lower trading fees.

Cryptocurrency exchanges will try to lower fees to encourage crypto traders to remain loyal to their platforms. Additionally, lower trading fees have a direct positive impact on trading volume.

Exchange-based tokens, such as governance tokens, can also be used by cryptocurrency exchanges. Governance tokens are very helpful in community-run platforms where member decision input is required.

Member participation in decision-making often spans various aspects of the organization or platform. For example, voting to create new Tokens, transferring to a new blockchain, manager elections, and dividend payments, etc.

On the other hand, cryptocurrency exchanges typically do not use governance tokens. Only a few cryptocurrency exchanges use governance tokens to support their platforms.

Governance tokens are becoming increasingly important in the crypto space, especially in the transition from centralized exchanges to decentralized exchanges. The top management or executives of centralized exchanges like Binance make all decisions on their own without consulting traders. Governance tokens aim to break the monopoly of the decision-making structure in cryptocurrency exchanges. Their purpose is to establish a healthy, decentralized crypto industry.

exchange Token example

Gate Token (GT)

Gate Token
(GT) is an exclusive Token of the Gate cryptocurrency exchange. It is a Token closely linked to the exchange’s chain and its operations, typically used to power the platform, pay gas
fees, facilitate liquidity between cryptocurrencies, and more.

It provides exchange users with a high-performance trading experience. In addition, it has advantages such as fast trading speed and low fees. Of course, since the platform uses tokens for buybacks and burns, holding this token may have an advantage in terms of potential price gains.
Most importantly, Gate is often the first exchange to list new tokens, which undoubtedly continues to attract new users and participation, as these new users often wish to invest in the new project before the token price rises due to greater competition from other exchanges.

The Huobi Token (HT)

Huobi exchange launched its Token to reduce trading fees. This Token serves as a margin on the Chinese platform for certifying traders. Therefore, Huobi Token has the functionality of KYC certification tools, which to some extent increases the overall security of the Huobi platform and the confidence and trust of investors.

KuCoin Shares (KCS)

The KuCoin exchange provides a dividend payment system for KCS token holders. KuCoin distributes about half of its trading fee revenue to KCS token holders, offering incentives to its members.

The OKEx Token

OKEx Token, also known as OKB, is the native coin of the cryptocurrency exchange OKEx, launched without any fundraising or ICO. The OKEx platform distributed approximately 60% of OKEx to its users for free. Unlike other tokens, OKEx created OKB not to seek monetary gains or liquidity, but to enhance the efficiency of the system and the smoothness of trading within the OKEx ecosystem.

FTX Token (FTT)

FTT is the native cryptocurrency Token of the FTX ecosystem. FTX is a cryptocurrency derivatives exchange focused on over-the-counter (OTC) trading, offering services such as futures and leveraged tokens. FTT holders benefit from FTX transactions as a platform coin, including lower trading fees, fee burns, OTC rebates, futures trading collateral, and socialized gains from the insurance fund. FTX has also carefully designed incentive programs to increase network effects and demand for FTT while reducing its circulating supply.

Last week, after competitor Binance announced plans to acquire FTT, the company’s market value evaporated by the majority. BNB price It fell from around $22 to less than $5 in a day, with a market value evaporation of over $2 billion.

Conclusion

Exchange tokens are native tokens of specific cryptocurrency exchanges. These tokens serve functions such as reducing trading fees, providing liquidity, and acting as governance tokens on cryptocurrency exchanges. Different cryptocurrency exchange tokens play different roles on their respective platforms. For example, some tokens can serve as payment solutions for IEO projects launched on the platform.