A Crypto Exchange Is Buying Back $24 Million-Worth of Its Own Tokens
FCoin, a new cryptocurrency exchange that saw spiking trading volume recently due to its controversial revenue model, has revealed a plan to buy back millions of its own tokens to provide capital for a new fund of funds.
The exchange announced last Friday that the new fund will be backing a group of selected token funds to further invest in blockchain and cryptocurrency projects. The funds invested in will all be accredited sponsors, it added.
During an initial phase, it will allocate 100 million of its own FT tokens – worth around $24 million at press time – to fund the project. However, instead of providing the amount from its own reserves, FCoin said the the capital will come from a buyback of tokens on the secondary market.
The move accompanies FCoin's addition of a new "FT trading zone," also announced on Friday, which includes trading pairs between FT and other tokens.
The exchange stated that only projects that have raised over 3 million FT through the fund of funds and have been recommended by at least two sponsors will be eligible for listing in the new trading section.
As previously reported by CoinDesk, FCoin saw soaring trading volumes after launch due to the adoption of a new business model called "trans-fee mining," which reimburses users' transaction fees with the exchange's FT tokens.
While the model has drawn industry criticism over its long-term sustainability, data from CoinMarketCap shows that the platform recorded some $3.8 billion in trading volume over the last 24 hours.
That said, FCoin's plan to buy back its tokens from the secondary market also follows a continuous decline in the price of the FT token, which has plunged by around 80 percent over a month, from $1.25 on June 13 to around $0.24 at press time.
Coins image via Shutterstock
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