IOSG Partners: Binance's Institutional Rite of Passage
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IOSG Partners: Binance's Institutional Rite of Passage
This article will discuss the rationality of listing fees and ways to address them.
Navigating Web3 tides with focused insightsAuthor: Jocy, Partner at IOSG Ventures
The entire exchange industry is undergoing shifts and rotations. I've been using exchanges since 2013, starting with Huobi. From 2013 to 2017, many Chinese users loved Huobi. In every era, there are always one or two exchange founders deeply committed to product excellence, willing to infuse passion into their platforms. After China's September 4th crypto crackdown in 2017, people around me began discussing Binance and BNB, along with ICOs and the overseas expansion of exchanges. Over the past two cycles, under CZ and He Yi’s leadership, Binance has expanded globally, conquering markets and growing into the world's largest exchange, with users surpassing 300 million. Now let's dive into the topic: amid Binance’s recent accumulation of 19 early-stage Launchpool projects, discussions have emerged regarding market skepticism over listing fees.
1. Exchanges Cannot Guarantee Returns
Let’s first look at some data: this year, Binance Launchpool projects achieved an average ROI of 2.13x, with an average valuation of $326 million, raising a total of $929 million through Launchpool—a very impressive figure.
Typically, retail investors don’t blame Nasdaq, HKEX, or SZSE when listed projects perform poorly and cause losses, because it's understood that platforms cannot guarantee profits for traders. However, since users receive airdrops of new projects while holding BNB or FUSD, many adopt a simplistic mindset—regardless of project quality, they immediately sell upon listing and convert proceeds back into BNB. During bull markets, such models generate wealth effects where project teams, the exchange, and BNB-holding retail users all benefit.
2. Where Does the Skepticism Come From? User Sentiment and Investment Trends
As the world’s largest exchange, Binance bears an extraordinary burden of expectations. Since launching its Initial Exchange Offering (IEO) platform in 2018, Binance has never stopped exploring and listing new projects across two full market cycles. Over time, Binance and its Launchpad projects have mutually reinforced each other. While many may have forgotten OKX and Huobi’s ICO projects from previous cycles, numerous Binance Launchpad projects remain active today. Binance has effectively become the most liquid "Nasdaq" in crypto, enabling most projects to achieve broad token distribution and absorption via its platform, making them more resilient through market cycles. For years, dedicated community members admired Binance’s research and investment capabilities, often choosing to buy into new listings (e.g., during Ethena’s launch). But as increasing numbers of newly listed projects trend downward from day one, breaking below initial prices, fewer retail buyers participate—some projects even see single-digit numbers of new buyers.
3. The Rise of “To-Binance” Patterns and Tactics
From the participants’ perspective, Binance—as the largest exchange—offers free airdrops to BNB holders, further enhancing BNB’s latent value and boosting user trading activity. Under these aligned incentives, BNB holders naturally expect Binance to help them identify top-tier investment assets, with near-zero tolerance for failure. Yet due to various review loopholes, specialized “To-Binance” schemes and VC-backed fake-data projects have emerged, capable of fabricating everything—from user growth and engagement metrics to TVL—in a turnkey package. As such cases multiply, doubts arise about Binance’s professionalism.
A recent trend sees certain projects specifically tracking which KOLs He Yi follows on Twitter, then bribing or sponsoring those influencers to publish content about their projects, hoping to catch her attention. Due to Twitter’s filter bubble effect, repeated exposure leads to amplified visibility of similar content. I even wonder whether He Yi, while scrolling Twitter, is trapped in an information silo, causing groundbreaking innovations and cutting-edge research from true pioneers to be buried in the noise.
4. How Can Binance Break Through?
4.1. Increase Transparency and Enforce Strict Penalties for Problematic Projects
Binance has consistently moved forward—recently introducing unlock information modules for Launchpool projects, which has been well-received. However, the biggest open secret remains: once everyone knows He Yi is the final decision-maker, all interested parties actively signal to her, turning most introductions and referrals into premeditated scripts. When the Ton ecosystem was hot, the most convenient game distribution platform got listed; when AI surged, social apps with fabricated user metrics were pushed; when memes peaked, the most Web2-like Instagram meme platforms made it onto Binance. Once these projects are live, even if serious founder or team issues emerge later, delisting isn't immediate—it would harm existing users' interests, putting Binance in a bind. Yet failing to impose strict penalties allows such projects to continue harming more users down the line.
Looking back at Western projects’ views on Binance’s listing fees across cycles: around 2021, a European team we invested in at IOSG outright rejected Binance’s listing fee demand during a meeting—they probably regret that decision bitterly now. This March, we backed a U.S.-based serial entrepreneur whose team clearly understood the required token allocation for Launchpad and the corresponding valuation/terms expected by Binance’s investment arm. He firmly stated he’d pay regardless—because given current market conditions, this was their optimal listing window, and Binance remained the best distribution channel. It was a win-win deal. But it took Western founders three years across two cycles to fully grasp the real meaning behind listing fees. So how can such deals become more transparent? Establishing shared rules, clearer listing criteria, increased fee transparency—akin to window guidance—with open feedback loops could reduce arbitrage opportunities between private and public markets.
4.2. Isolate Departmental Interests and Prevent Conflicts of Interest
I believe Binance should separate its listing and investment departments. When financial terms involving mutual benefits appear, listing evaluation standards risk deviation. The listing department must not become a revenue-generating tool for Binance’s investment arm, but instead remain objective and fair, helping users better identify high-quality projects and protecting user interests. To clarify: recent reports suggest a "Chinese wall" exists between Binance Labs-invested projects and the listing committee, indicating Binance’s attempt to avoid favoritism. But this standard shouldn’t apply only internally—it must extend equally to Western teams funded by Binance’s investment division.
4.3. Rigorous Due Diligence, Diversified Decision-Making, and Zero Tolerance for Fraud
Binance’s internal process typically follows BD → Listing → Committee approval. To improve, Binance should strengthen collaboration between research and listing teams, increase the weight of research input, and publish findings regularly. Many Binance research reports are already highly professional and forward-thinking. The research team should play a stronger advisory role in shaping listing directions, even proactively disclosing Binance’s current focus areas and preferred project types to gather early market feedback and questions.
Taking IOSG’s investment process as an example, we conduct thorough internal discussions and documentation—from pipeline summaries to detailed memos. Theoretical rigor and factual accuracy are paramount: distinguishing real users from fake ones, identifying sustainable revenue models. Anyone with 3–5 years of experience in traditional investment research should possess a disciplined due diligence framework. Therefore, unless driven by conflicts of interest, Binance should not tolerate knowingly problematic projects being listed. Internal decision-making power should shift toward evidence-based researchers, improving overall assessment quality, diversifying decision mechanisms. As the next bull market approaches, competition among exchanges will intensify. Many platforms will prioritize traffic and hype over fundamentals, placing Binance in a difficult position.
Earlier, a Twitter user shared listing application forms from Binance, Coinbase, and Upbit (see below). I still recommend startup teams consider these three exchanges this cycle—they remain the market’s best options. With Trump’s election win, the coming 6–12 months will likely be a golden window for project listings, accompanied by fierce competition.
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