Binance’s CZ suggests CEXs immediately list like DEXs, prompting concerns

Changpeng “CZ” Zhao, co-founder and former CEO of Binance, criticized the current token listing process on centralized exchanges (CEXs) this week, arguing that the present system often leads to tokens surging in price on decentralized exchanges (DEXs) before being dumped on CEXs, making the system unfair and inefficient.

“As an observer, I think the Binance listing process is a bit broken. They announce, then list 4 hours later. The notice period is necessary, but in those 4 hours, the token prices go high on DEXes, and then people sell on CEX,” Zhao wrote on X on Feb. 9.

There are, however, deeper issues at play that make this approach unworkable.

The shift from user numbers to market dynamics

CZ has previously said that “a large number of users” was a key metric Binance would look at when considering listing. Now, CZ’s claim is that if a project has a short window between the announcement of listing on a CEX and going live, then the price goes up on DEXs, and then the arbitrage begins dumping the price down along with it.

What happened to the importance of a “large number of users”? Back when CZ emphasized this metric, the crypto space was more focused on utility than speculative trading.

In the past, it might have taken a decade to see a million projects launch; now, each individual month sees upward of 1 million projects launched. There is not enough “utility” to go around.

The importance of utility has been diluted by this flood of new tokens. Utility-based projects, which require time to build a strong user base, are being pushed aside as liquidity flows toward memecoins and speculative assets.

When people can chase fast gains from newly launched DEX tokens, why would they commit to the long-term development of a utility-driven project?

The mysterious path to CEX listings

Getting a token listed on a DEX is pretty straightforward. Have a token and an established asset — such as USDt (USDT), USD Coin (USDC), Ether (ETH) or SOL (SOL), for example — and create a liquidity pair, which is a ratio of the new token and established asset. This can easily be done on a DEX like Raydium, Uniswap, PancakeSwap or any number of alternatives.

There are no approval steps to pass, and there are no hoops to jump through. With DEXs like Pump.fun, freedom is so abundant that it has attracted lawsuits over unregistered securities and intellectual property infringement.

However, despite DEXs collectively facilitating $16 billion in daily trading volume, they still pale in comparison to CEXs, which see over $165 billion in 24-hour volume. The opportunity to reach new tokenholders pushes projects toward CEX listings, where they can access deeper liquidity and greater market exposure.

To make the leap to a CEX, there are some criteria a project must typically demonstrate, like market traction, a verified and active community, tech innovation, tokenomics and security. Projects must have their track record vetted, and since they need some historical market traction, a CEX launch is generally preceded by a DEX launch.

Projects typically launch on a DEX first to build market traction before attempting to secure a CEX listing. However, venture capital (VC) involvement often skews this process. Many major exchanges have VC arms — such as Coinbase Ventures, Binance Labs, and Kraken Ventures — which can create conflicts of interest, as VC-backed projects may receive preferential treatment.

Cryptocurrencies, Changpeng Zhao, Markets, Binance, Decentralized Exchange, Liquidity

Securing a VC or whale investment can be a massive leg up for a project, providing connections, capital and name recognition/legitimacy. However, it can also lead to centralization of ownership, misaligned incentives and aggressive token dumping, where early backers exit at the expense of retail investors.

This often leaves the project struggling to maintain long-term stability.

Number of tokens and liquidity

When CZ talked about “users” back in late 2021, roughly tens of thousands of projects were being launched each month, with a total of around 3.1 million launched in a year.

Compare that to 2024, when the average number of new tokens was 1.4 million per month, ranging from 900,000 to 2.2 million. In January 2025, over 3 million new tokens were launched.

As of early February, over 38.4 million tokens have been launched since 2009. Solana has the highest number of token launches, with 29 million in total. BNB Smart Chain follows with 4 million tokens, while Base has 2.8 million and Ethereum has 1.1 million.

These four chains dominate in terms of token launches, with Solana leading by a significant margin. Other chains — such as Polygon, Arbitrum, Optimism, Tron and Blast — have comparatively fewer tokens, highlighting the concentration of new token activity on a few major platforms.

How does this impact listings on CEXs?

It is obvious that with these kinds of numbers, there must be some criteria for listing on a CEX, contrary to some of CZ’s comments. But even if the requirements were loosened, is there enough liquidity to go around?

To list on both DEXs and CEXs simultaneously, a project must supply significant liquidity across multiple trading pairs. Unlike DEXs, where listing requires little beyond smart contract deployment, CEXs impose additional requirements that projects often struggle to meet.

For each DEX and each CEX, another liquidity reserve pair needs to be created. Organic projects with no whales or VC backing will have a hard time meeting these demands, especially in an era where projects are plentiful but retail interest is stagnant.

This retail interest would have previously searched for utility projects that could build into a bull run, and returns would have been found there. Instead, the short-term memecoin pumps — which can be manipulated through market-making outfits, bots and other schemes — can make it appear as if there is organic interest in a project even if there isn’t.

CEXs used to serve as a filtering mechanism for these types of projects. While CZ may be directionally correct — in that the process for listing on a CEX needs some reform — over-correcting would be just as problematic or worse.

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