Crypto glossary
Exchange token
An exchange token is a cryptocurrency issued by a trading platform that gives holders benefits such as fee discounts, launch access or staking rewards.
Many large centralised exchanges have issued their own tokens. Holding or paying fees with them typically unlocks trading discounts, priority access to token sales on the exchange's launchpad, higher savings rates or VIP tiers. Some have grown into the native assets of blockchains run by the same company, such as BNB on BNB Chain.
Exchanges often support their tokens with buyback and burn programmes, using part of their profits to buy tokens on the market and destroy them. Those programmes, plus the platform's user base, tie the token's value loosely to the exchange's business, which is why traders sometimes treat them as a proxy for the company's success.
The link to a single company is also the main risk. Holders have no equity, no claim on profits and depend on the exchange's honesty about burns and supply. FTX's FTT shows the danger: the exchange and its sister firm used the token as collateral, and when doubts emerged in November 2022 its price collapsed along with the exchange.
Example
A trader holding an exchange's token pays trading fees with it and gets a 25% discount, while the exchange announces a quarterly burn of tokens bought back with part of its revenue.