Dialogue with Bitget Research Institute, uncovering the "principles" behind the hidden gems in spot trading

Author: flowie, ChainCatcher

Expectations for the spot Bitcoin ETF are driving the market into a bullish phase. In addition to the rising prices of mainstream cryptocurrencies like Bitcoin and Ethereum, several new sectors such as BRC20 are also experiencing a surge in popularity.

The more the market transitions from bearish to bullish, the greater the test for centralized exchanges (CEX). Those who first capture user demand will be the ones to reap the rewards. Recently, leading tokens in the BRC20 sector like ORDI, modular blockchain leader TIA, and the fuel token GAS of the public chain Neo have surged, with trading volumes skyrocketing, making them some of the hottest tokens in the market. According to Coingecko data, these popular tokens are primarily dominated by Binance, OKX, and Bitget, which occupy the top three market shares.

Compared to Binance and OKX, Bitget's performance in this round of popular tokens has indeed been somewhat surprising. Additionally, according to the recent "2023 CEX Market Report" released by 0xScope, Bitget's comprehensive market share has risen to fourth place, making it one of the centralized exchanges with rapid spot growth.

During each critical phase of the market transitioning from bearish to bullish, the landscape of centralized exchanges is reshuffled. Why has Bitget, which started as a derivatives exchange, managed to break through and become a rising star in the spot market in less than a year? How did it quickly identify user needs and seize the opportunities presented by the hottest tokens? Recently, we interviewed the Bitget Research Institute to uncover the "mindset" behind its token listing strategy.

The Rising Star in the CEX Spot Market

Recently, the Web3 knowledge graph protocol 0xScope released the 2023 CEX Market Report, assessing significant changes in market shares among various centralized exchanges (CEX) over the past year.

0xScope noted that a major emerging trend in the CEX landscape over the past year is the intensified competition in the spot market. In terms of spot trading, while Binance still holds a dominant position, its market share is loosening. In addition to facing challenges from traditional competitors like OKX and Coinbase, it is also being attacked by players like Bitget and MEXC. Notably, exchanges represented by Bitget are capturing a portion of trading volume through their proactive token listing strategies. Bitget's comprehensive market share has now risen to fourth place, making it one of the centralized exchanges with rapid spot growth.

From Bitget's recent token listing performance, on one hand, Bitget has captured some of the hottest concept tokens, allowing users to quickly enjoy early profits. For instance, in the recent hot BRC20 sector, Bitget's performance for ORDI and TIA in the spot market ranks just behind Binance and OKX, with its spot trading volume consistently holding third place. For example, on November 16, the total spot trading volume for ORDI reached 440 million, with Binance's spot trading market at 160 million, ranking first; OKX's spot trading volume was 110 million, ranking second; while Bitget's spot market had 41 million, ranking third.

On the other hand, Bitget has also accurately timed the listing of some older tokens that may experience a resurgence, bringing unexpected wealth opportunities to users. For example, the fuel token GAS of the public chain Neo, which was launched on Bitget on October 25, saw a tenfold increase over two weeks, creating a wealth effect.

The Persistence Behind Creating Wealth Effects

After experiencing this round of market-wide bullishness, Bitget has been referred to by users in the crypto community as a fusion of "Binance + MEXC," combining the selective quality of Binance with the speed of MEXC, offering quality and efficiency.

How can Bitget balance quality and efficiency? What is the token listing philosophy that Bitget adheres to? The Bitget Research Institute revealed three key principles during the interview: value-driven, efficiency-oriented, and comprehensive coverage.

The so-called value-driven principle means that the tokens listed should ideally allow users to make money, so the token must either have short-term price increase expectations or show steady long-term growth due to strong fundamentals. For example, the recent popular tokens ORDI, TIA, and GAS have all continued to rise after being listed on Bitget, providing users with significant profits.

Efficiency-oriented means launching tokens as quickly as possible. For early popular tokens, Bitget is usually the first or second CEX to launch them quickly. For instance, in the Bot sector, Bitget listed the asset UNIBOT back in July, providing users with a valuable opportunity to build positions. For tokens that experience a resurgence due to significant positive news, Bitget chooses the most suitable time to launch them, allowing users to earn profits. For example, after GAS showed unusual activity, Bitget immediately listed it, enabling users on Bitget to earn tenfold returns within two weeks.

Comprehensive coverage refers to enabling users to achieve one-stop shopping for popular assets. Whether it's the hottest tokens on the market like ORDI, TIA, and GAS, or relatively niche fan tokens like SPURS, meme tokens like GROK, or Bot sector tokens like UNIBOT, all can be traded on Bitget, catering to the diverse needs of different users. Additionally, Bitget supports a SWAP function, encompassing almost all tokens with trading pools on-chain, allowing even niche assets to be purchased.

"Top-Down" Research-Driven Approach

Ensuring a balance between wealth effects and efficiency is no easy task. How does Bitget manage to capture market trends in a timely manner, and what is the research mechanism behind it?

The Bitget Research Institute revealed that its token listing evaluation has clear quantitative standards, but unlike many other CEXs, Bitget does not primarily rely on business and channel project recommendations; instead, it is driven by top-down research, actively seeking out quality assets.

On one hand, Bitget's research team has established an automated on-chain data monitoring system, allowing them to grasp any unusual activity in on-chain assets in real-time. On the other hand, Bitget conducts continuous research and advance planning across various sectors to ensure that no hot asset is missed.

Under this research-driven approach, Bitget focuses on the following five dimensions for token listings:

1. Industry Trends and Market Hotspots

Bitget believes that projects aligned with industry development trends will become market favorites, making it highly likely for such projects to become market hotspots. The criteria for determining whether a project aligns with "industry development trends" include:

1) Whether it effectively addresses native blockchain issues, such as ARB and OP attempting to solve Ethereum's main chain scalability issues;

2) Whether it effectively meets user trading needs, such as Unibot helping users trade on-chain assets more simply and efficiently;

3) Whether it has sufficient market attention, for example, PEPE, although a meme coin, has strong community consensus and attention.

Based on this premise, earlier this year, Bitget identified market opportunities related to Arbitrum. At that time, the TVL of the Arbitrum ecosystem was continuously growing, with rapid development of DeFi projects within the ecosystem, and high market expectations for the upcoming ARB token issuance and airdrop. Thus, Bitget launched the Arbitrum ecosystem activity week in early February, timely listing a large number of popular assets from the Arbitrum ecosystem, resulting in significant wealth effects and establishing Bitget as the main hub for Arbitrum ecosystem tokens.

Conversely, for overly short-term hype, Bitget tends to be more cautious. For instance, when the "Korean room temperature superconducting LK-99" was trending on social media, a meme coin named LK99 appeared on-chain. After considering various factors such as the consensus in the cryptocurrency world, on-chain popularity, and risks, Bitget decided not to list it, and the outcome proved that the LK99 token nearly went to zero.

2. Community Consensus

"Those who gain community consensus gain the world."

Bitget evaluates a project's social media popularity not by directly looking at the number of Twitter impressions or the number of Telegram community members, as these can easily be faked at low cost and thus have little reference value.

To this end, Bitget has established its own smart money address database and Twitter KOL database, and also scrapes trending cryptocurrency keywords from Google Trends daily as a supplement. Through these comprehensive assessments, Bitget determines whether a project is genuinely being discussed and favored. The quality of traffic to the project's official website (unique visitors, visit duration, number of pages visited, bounce rate) is also taken into account.

Additionally, the authenticity of on-chain data is verified. For example, if some newly emerged meme coins show a 24-hour on-chain trading volume of $10M, but upon verification, it is found that over $7M of that volume is MEV trading, then the actual trading activity is not as high as it appears. Similarly, for projects that have not yet undergone TGE, if it seems that there are many potential holding addresses, but most addresses can only receive a very small amount of tokens (less than $10), Bitget will choose to set thresholds to assess the number of effective addresses.

3. Technological Innovation

Bitget believes that a project's technological innovation should meet real market demands and ideally be closely integrated with other ecosystems to promote mutual growth. In terms of technological innovation, Bitget highlighted two decisive cases for listing:

One is the Telegram Bot sector token, where Bitget was the first CEX to list a token in this sector. Bitget identified that many users were experiencing inefficiencies and inconvenience when trading meme coins during the meme season, indicating a market need for simpler tools to support users' advanced on-chain trading needs. The emergence of the Telegram Bot not only meets a real market demand but is also closely tied to the meme ecosystem, leading Bitget to judge it as an innovation with growth potential.

However, at that time, UNIBOT had potential risks in its token contract due to its mechanism (such as the ability to pause trading or change trading fees), so being the first CEX to launch UNIBOT involved significant risk. After conducting in-depth analysis, Bitget determined that UNIBOT could generate daily profits of up to $100,000, with profits continuously expanding (even reaching daily profits of $600,000 later), and the risk of a subjective exit was very low compared to the benefits of sustained operation. Thus, Bitget firmly decided to be the first CEX to list UNIBOT, and the results proved that UNIBOT brought astonishing returns to investors.

The second case is the Ordinals BRC20 tokens, where Bitget was also one of the first CEXs to list this series of tokens. Bitget judged that the innovation of BRC20 was not just about "conveniently issuing tokens on Bitcoin," but rather it suddenly revitalized the dormant BTC ecosystem. This innovation activated transfers and transactions on the BTC chain, aligning with miners' interests and ensuring support from the large miner community.
Moreover, the innovation of Ordinals also revealed the enormous potential of the BTC ecosystem to cryptocurrency investors, and "huge expectations" are precisely what the dormant market needs most. Consequently, Bitget promptly listed multiple popular BRC-20 assets.

4. Token Economics

Bitget believes that token economics is the most direct influencing factor on a token's performance; poor token economic design can lead to a token peaking at launch, but its price trend will weaken over time.

Bitget does not dogmatically judge based on the absolute size of initial circulating market capitalization but evaluates the reasonableness of pricing based on the project's position within its sector ecosystem. When an asset's market capitalization is significantly lower than its ecological positioning, product quality, and market expectations, the likelihood of the token rising increases. Additionally, the token distribution model and release speed largely determine the future selling pressure and price trend of the token.

Furthermore, Bitget emphasizes evaluating whether the token distribution model is reasonable. In Bitget's view, token distributions that lean more towards the community rather than overly centralized projects tend to have better vitality. For example, AIDOGE, which Bitget listed promptly, distributed 95% of its share to addresses that had previously received ARB airdrops, creating strong community consensus and significant traffic from the outset, resulting in astonishing gains during the early meme season.

Conversely, the SIMPSON series tokens, which appeared to have high on-chain popularity during the meme season, had issues with their token distribution. The creators of the Simpson tokens deployed about one-third of the initial tokens to a Uniswap liquidity pool and distributed a total of 2% of tokens to 20 addresses to obscure the fact that a single entity controlled over 40% of the tokens. They also used CoinTool four times to distribute minimal tokens to 800 addresses, creating a false appearance of high project popularity. The final result was that the whales concentrated in 20 addresses sold off and cashed out on May 13. Bitget used systematic token economics and on-chain data analysis to keep such assets out of the exchange.

5. Security

Bitget believes that security is the foundation of a token; no matter how splendid a building is, it will collapse if the foundation is poor. Similarly, even a good token will go to zero if there are significant security risks. To this end, Bitget has established a review system for token security:

In terms of token contract security, Bitget has a dedicated internal contract security assessment team that presents various risks of the token for further evaluation by researchers. Many early meme assets often have some contract risks initially, but relinquishing contract permissions is a common practice.

Regarding the safety of on-chain liquidity pools, Bitget examines whether the LP has locked assets, how much has been locked, for how long, or whether any tokens have been burned. If a large portion of the tokens in the pool can be withdrawn at any time, the token price may face short-term crash risks, and Bitget will be very cautious with such projects.

In terms of token concentration, Bitget checks whether the tokens are concentrated in a small number of EOA addresses (indicating a significant risk of whale manipulation) and whether there are situations similar to the aforementioned "SIMPSON series token distribution issues" that hide large whale control.

Regarding projects with negative histories or potential risks, Bitget carefully examines whether the project itself or the project team has compliance risks, severe ethical risks, etc. For instance, when PulseChain was very popular, Bitget discovered during due diligence that it had disputes with the SEC and would refuse to cooperate with such projects.

During this critical period of transitioning from bearish to bullish, Bitget has achieved phased results under its quality, efficiency, and comprehensive token listing philosophy, combined with a top-down research-driven approach, becoming a dark horse in the CEX spot market. As the market continues to bullish, whether Bitget can maintain and iterate its token listing advantages to gain broader market recognition remains to be seen.