Crypto exchange Binance has urged small and medium-sized projects to address the trend of low float and high fully diluted valuations (FDV) in the crypto market. On May 20, Binance invited these projects to apply for its listing programs, emphasizing the need for sustainable models to enhance the overall crypto ecosystem.

Binance aims to support projects with strong fundamentals, organic community bases, sustainable business models, and dedicated teams committed to acting responsibly within the industry. The exchange believes that backing such projects will foster the development of the blockchain ecosystem. This initiative appears to counter the current trend of projects launching with high market capitalizations despite many tokens being locked.

On May 17, Binance Research highlighted the increasing prevalence of token projects launching with low circulating supplies. These projects often allocate a significant portion of their token supply for future releases, leading to rapid price appreciation during bullish market conditions due to limited liquidity at launch.

However, Binance warned that this kind of price growth is unsustainable. When a large number of tokens are unlocked and hit the market, it creates a wave of supply that can lead to price drops. Pseudonymous crypto researcher Flow noted that in the past six months, 80% of tokens listed on Binance have declined in value since their launch. Flow suggested that these new tokens often serve as "exit liquidity" for insiders who capitalize on the limited retail access due to the low initial circulating supply.

Looking ahead, the market faces significant sell pressure. In May 2024, approximately $3 billion worth of vested crypto tokens are scheduled to be unlocked, with projects like Sui and Pyth Network expected to release over $1 billion in tokens to various holders. Citing data from Token Unlocks and CoinMarketCap, Binance estimated that around $155 billion in tokens will be unlocked from 2024 to 2030. This large influx of tokens could strain the market without a corresponding increase in demand and capital flows.