What is KuCoin Token?
KuCoin is a spot trading platform for various digital assets and cryptocurrencies, including Bitcoin, Ethereum, NEO, EOS, Tether, and more. KuCoin Token (KCS), the native token of KuCoin, was created as an ERC20 token on the Ethereum blockchain, where customers can pay for trading fees at a discounted rate, participate in exchange-related activities, and more. It is a utility token that allows traders to benefit from the services and growth of the exchange.
A brief history of KuCoin Token
Launched in 2017, KuCoin is a crypto-asset exchange advertising itself as a hybrid exchange that incorporates elements of controlled and decentralised exchanges. The team’s long-term objective is to convert to an entirely decentralised exchange mechanism. The exchange currently runs via a more centralised architecture, seeking to emulate best practices in conventional asset exchanges like specialised risk and compliance teams. These teams work on internal controls and cross-departmental evaluations to decrease fraudulent behaviour on the platform. The exchange’s current CEO is Johnny Lyu.
Between 15 August 2017 and 1 September 2017, KuCoin offered KuCoin Shares (KCS) tokens for sale. The exchange created a total of 200 million KCS tokens, 100 million of which were sold during the public sale. KuCoin’s founders were allocated 70 million KCS, or 35% of the total token supply, which was locked into a vesting period. The exchange also allotted 50 million KCS, or 25% of the supply, for yearly sales between 2 September 2018 and 2 September 2021. Early investors, influencers, and consultants received a total of 30 million KCS, or 15% of the supply, which was locked until 2 September 2019.
In January 2021, KuCoin upgraded its smart contract to enable the token’s expansion into more parts of the blockchain ecosystem, including decentralised finance (DeFi), decentralised exchange (DEX), and more.
How KuCoin Token works
As a cryptocurrency exchange, KuCoin allows users to purchase, trade, and store a variety of cryptocurrencies. Users can trade in the KuCoin exchange through a web interface and a crypto trading app for mobile devices. KuCoin also offers custodial and non-custodial services; customers can either keep their crypto assets directly on the KuCoin exchange or link a third-party wallet to the exchange and trade straight from that wallet. Over the course of its operations, KuCoin has expanded its crypto products and services.
To enhance its token economics, KuCoin executes a regular buyback and burn scheme for KCS, under which the exchange plans to buy back and destroy 50% (100 million) of the token supply. In the long-term view, the exchange aims to achieve a fixed supply of 100 million KCS after the buyback program concludes. The cash used to execute the repurchase scheme comes from 10% of trading fees earned from exchange operations. As of May 2022, the KCS total supply stands at less than 146 million tokens.
As part of the exchange’s security operations, KuCoin employs multiple wallets with differing degrees of security, depending on the time duration for transactions. Microtransactions occur using an Amazon Web Services-based multi-firewall private network. KuCoin workers receive a unique cypher code to initiate withdrawals from the wallet. Longer-term assets are kept in bank custody and need multiple signatures through separate private keys in order to be accessed.
What is KuCoin Token used for?
As KuCoin’s native token, KCS offers a 20% discount on trading fees. The token also grants KuCoin users access to new token sales on KuCoin Spotlight and the KuCoin Earn lineup of crypto earning products.
KCS also distinguishes itself from other exchange-related tokens through its KCS Bonus incentive mechanism for holders. Users who hold at least six KCS are entitled to a daily bonus, which is distributed from 50% of KuCoin’s daily trading fee revenue, split according to how many KCS tokens a user holds.
In addition, KCS has expanded its use case as a payment method on a variety of platforms outside of KuCoin, including hotel reservations website Travala; gaming platforms PlayGame, BetProtocol, and Splinterlands; and payment services SwirlPay, Pundi X, and CoinPayments, among others.
