In the world of cryptocurrencies, centralized exchanges (CEX) play a key role. They allow users to simply access and exchange their tokens. Major CEXs, like Binance, have established themselves as major institutions and preferred entry points for newcomers to the crypto world.
However, the collapse of FTX, the current bear market and new regulations are testing these crypto giants. Recently, Binance was fined a record $4.3 billion in the US and its iconic CEO, CZ, was forced to resign. In this tense climate, one CEX in particular attracts our attention.
Founded in 2018, Bitget has quickly become one of the largest centralized exchanges with over 20 million registered users. Its $BGB token offers various benefits, from trading fee discounts to airdrops, stake rewards and participation in platform governance.
A token worth more than $700 million
With the growth of Bitget and its increasing number of users, BGB’s valuation has reached $700 million, placing it in the top 100 of the cryptocurrency market! However, our analysis reveals that almost all BGB tokens are held by the Bitget team, spread over about ten wallets.
This configuration described in the Bitget white paper reveals a remarkable centralization of the $BGB token. In fact, only 25% of the total supply is allocated to the public, but even that portion appears to be largely deposited with Bitget itself. This implies that although these tokens are initially acquired by users, a large portion is ultimately in the hands of the platform.
The rest, 75% of the $BGB supply, is managed directly by the Bitget team. Thus, almost all $BGB tokens are, in one form or another, under the control of Bitget – either directly held by the team or deposited on their exchange platform.
This observation, confirmed by the white paper and Bubblemaps’ on-chain analysis, raises questions about the distribution and decentralization of tokens. Furthermore, although the white paper mentions a monetization plan, our research was unable to verify its effective use, leaving doubts about the transparency and management of tokens by Bitget.
The recent collapse of large centralized exchanges like FTX is a reminder of the importance of tokenomics. FTX’s token, FTT, was highly centralized, with only 14% of the supply available to the public. FTX had also distributed FTT tokens to Alameda Research, which used it as collateral for large loans. This led to a liquidity crisis when Alameda’s balance sheet went public. Currently, Bitget does not appear to be following this trajectory. The team has maintained full control over its BGB tokens, reducing dependencies and avoiding cascading effects.
In comparison, Binance’s native token, BNB, had a more balanced distribution when it launched in 2017:
- 50% for the public
- 40% for founders
- 10% for angel investors
Today, the distribution of BNB and the debt associated with it is the subject of an investigation by the SEC, especially after the resignation of Binance CEO CZ.
The Bitget team’s control of nearly 100% of $BGB’s supply is cause for concern, as is the lack of transparency around their monetization plan. But the absence of institutional investors could protect Bitget users from an FTX-like scenario.
*Contacted by Capital, the Bitget platform had not yet responded at the time of publishing this article.