The Dark Side of Binance Alpha

Author: The Smart Ape Source: X, @the_smart_ape Translation: Shan Ouba, Golden Finance

In short, Binance Alpha is a section within the @binance Web3 wallet that lists early-stage projects and simplifies their trading process. Users can earn Alpha Points by generating trading volume on listed Alpha tokens, which makes them eligible for airdrops from newly listed projects.

It is completely different from Binance spot or futures trading. Listing on Binance Alpha doesn't guarantee spot listing. Less than 7% of Alpha tokens are ultimately listed on spot exchanges. So, if spot trading already exists, why did Binance launch Alpha? There are official explanations and unofficial reasons. Officially, Binance Alpha is a "discovery zone" that allows users to trade very early-stage tokens directly from the Binance wallet. Compared to spot trading zones, which require proven fundamentals and liquidity, it's positioned as a more "gambler-friendly" environment. But I think the real reason is that Binance understands what its users want: airdrop rewards. At the heart of this are Alpha Points. They encourage user adoption of the Binance Wallet, generating more trading volume and bringing more users and revenue to Binance. It also allows Binance to test a wide range of projects without the reputational risk of a failed spot listing. Most projects that launch on Binance Alpha ultimately alienate their own communities. Imagine you've been there from the very beginning: supporting the project early on, testing every new feature, providing constant feedback, staying active on Discord, and helping newcomers. Then the TGE (Token Generation Event) arrives, and you're hoping your hard work will finally pay off. Instead, you see the token listed first on Binance Alpha and airdropped to Alpha Points farmers, and you haven't even received your community allocation yet. These retail investors then dump the token, causing the price to plummet, leaving you with only scraps. This is what happens to most projects listed on Binance Alpha, and it's very frustrating for many. The Hype and Pump Effect I've analyzed nearly every token listed on Binance Alpha and found that the vast majority fail to survive long-term. Everyone wants to know how much of each project's token supply was airdropped to Binance Alpha users, but Binance never discloses this information. They only publish the number of tokens claimed and the required points threshold, but never the total airdrop pool size. Estimates of the percentage of supply airdropped vary depending on the project, but typically range from 2.5% to 5% of the total supply. This is a significant percentage, especially since these tokens are allocated directly upon launch and not to the actual community. It's not surprising that these tokens are often immediately sold off. Recently, Binance Alpha users each received approximately $4,000 worth of $MYX tokens, a significant amount considering they weren't part of the original community. Trading Volume Manipulation: Alpha listing is becoming a mandatory step for spot listings. This means that all projects listed on Alpha are under immense pressure to demonstrate strong traction to secure a quick spot listing. One of Binance's primary criteria is trading volume. Guess what happens? Projects artificially inflate their trading volume to appear more attractive. This artificial inflated volume can take many forms: wash trading, massive allocations of Alpha points, or covert pump and dump strategies. The problem is, instead of attracting a loyal community, projects primarily attract opportunistic airdrop farmers. This is unsustainable in the long run. Sustainability Issues Some might argue that Binance Alpha did pump some tokens. This is true; Alpha creates scarcity and exposure, naturally attracting traders seeking early entry. Remember, users staked Alpha points to qualify for the airdrop, which required them to generate more trading volume. All of this increased liquidity and market capitalization. However, this was unsustainable. The vast majority of users weren't attracted to the project itself; they were attracted to the points. Once the rewards ended, activity collapsed. Alpha also didn't offer any real product innovation. It was primarily a showcase platform with an airdrop mechanism, making it difficult to sustain interest after the initial hype faded. Furthermore, the tokens listed on Binance Alpha could already be traded directly on decentralized exchanges (DEXs), often at lower costs. The only reason people use Alpha is to cash in on the airdrops. This makes it difficult for any project to build lasting value through an Alpha listing. I'm happy to see more and more communities starting to realize this. For example, the $LINEA community understood that LINEA shouldn't be listed on Binance Alpha, realizing that this would distribute tokens to everyone except the community that supported them from the beginning. There's also an important point that many people don't seem to realize: Alpha listing doesn't guarantee spot listing. I've seen many projects accept Alpha listings for the chance of a spot listing, essentially selling out their community, only to ultimately never make it to spot listing. The result? They sacrificed their community for nothing. The VerasityTech team themselves said: If they couldn't get a spot listing on Binance, they'd essentially be screwed. It's clear that the only reason they chose to list on Alpha was for the hope of getting a spot listing. Ultimately, this is the project's choice. But in the long run, I personally don't think the Alpha listing is good news. It usually means that the project is sacrificing its community for short-term hype.

I prefer to see a project stay true to its community and build momentum over time.

This doesn't mean every project that launches on Alpha is bad, the specific terms may vary, but in general, Alpha is not a positive sign for sustainable growth.