Binance Highlights 4 Key Concerns Raised by Investors That Hinder Crypto's Mainstream Adoption

Based on several crypto events, the Binance report highlighted four broad themes that investors have raised, which must be dealt with to ensure seamless mainstream adoption of cryptocurrencies.

Binance has published its latest market report, highlighting four key concerns raised by market participants. These concerns must be addressed to ensure safer investments ahead.

The report is based on several recent crypto events, including the high valuation of some new crypto projects, centralization risks, and lack of transparency in project funds expenditure.

According to the report, most investors are largely concerned with the high valuation of some new crypto projects that have launched with low circulating supply.

For example, some new crypto projects at their Token Generation Event (TGE) have a high market cap, almost similar to established projects, but a very low circulating supply.

As a result, the projects tend to drop in value as early investors dump to the small secondary market in the subsequent token unlocks.

“This phenomenon has sparked concerns among investors, especially those who enter the market later and may face significant losses due to the TGE participants cashing out quickly,” the report noted.

Moreover, the recent crypto events have shown that some crypto projects have a high concentration among the top holders.

For instance, some meme coin projects have early adopters, who are mostly developers and insiders, holding the majority of the tokens.

Interestingly, Binance noted that some crypto projects have inflated their token holders through dubious practices.

Furthermore, on-chain data shows that transactions of the top account holders of some crypto projects are highly interconnected, thus indicating ownership of a single entity.

“The high centralization of some crypto projects poses a threat mostly to governance, resulting in low community engagement,” the report stated.

While most crypto projects, which have achieved higher decentralization aspects, use DAO to manage funds, Binance noted that investors are concerned over low transparency in expenditures.

For example, Polkadot (DOT) has been under significant market scrutiny after its recent financial disclosure revealed high spending on non-performing marketing efforts.

The Ethereum Foundation has also been involved in several ETH sell-offs worth nearly $10 million year-to-date. However, the firm has revealed that the funds are meant for salaries and grant financing.

“Greater transparency in treasury fund usage fosters responsible financial management and encourages active participation from governance token holders. We should strive to make detailed fund disclosure the norm,” Binance noted.

Over the years, different crypto projects have rebranded to appeal to new investors. The rebranding can include the name of the company or their native token.

For example, Polygon network recently rebranded its native token from MATIC to POL. Additionally, Terra Luna network was rebranded to two networks after the major collapse in 2022.

However, Binance noted that investors are concerned with projects that rebrand to obscure certain actions.

“Some projects have also been accused of ‘rebranding’ to avoid past controversies or unfavorable associations, which has raised investor concerns regarding the true nature of the rebrands,” the report added.

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