When investing in crypto it pays to DYOR (Do Your Own Research) to identify the latest trends, market cycles, level of adoption, new developments, and so on. There is literally so much to analyze and look into that crypto research alone is a full-time job. 

However, sometimes it pays to take a step back and simplify things when identifying good crypto investments. For instance, take a look at what has traditionally made investors big returns in the past. In the traditional stock market, successful companies with real products, real services, and growing revenues delivered returns on investment. 

In crypto, however, we are still very early and there isn’t a whole lot of adoption and usage just yet. It’s hard to choose good crypto investments based on their products, services, adoption, or revenues because, for the most part, there is none. Therefore, speculation is the largest driver of most crypto investments. 

However, there is a subset of cryptos that offer the same metrics as real companies in the stock market, and those cryptos are exchange tokens. 

Just like traditional stocks or shares in a company, exchange tokens have a real company with real products, real services, and real revenues backing them up. It’s easy to understand and see the value proposition of exchange tokens because they are the most similar to traditional shares of a company and they have real utility used by real paying customers. 

For this reason, we have seen exchange tokens explode in price and popularity, making them one of the hottest trends in crypto for 2019. Just look at Binance Coin (BNB), it’s one of the top performers of 2019 with 534% gains at its peak. Other exchange tokens such as OKEx’s token (OKB) went up 150%, and Huobi’s token (HT) went up 380%. 

These types of cryptos are performing very well and there is one, in particular, that’s grabbed my attention due to its utility, current valuation, among other things. The crypto I speak of is KuCoin Shares (KCS), the official exchange-based token and native currency of the KuCoin crypto exchange.

In the following article, I provide a comprehensive and subjective look at KuCoin Shares (KCS) so that you can fundamentally understand what KCS is and its see value proposition. So buckle up and enjoy this comprehensive guide to understanding the new and popular crypto exchange utility token – KuCoin Shares (KCS).

History of KuCoin Shares (KCS)

KuCoin Shares (KCS) is an exchange based token for the KuCoin cryptocurrency exchange based out of Hong Kong. KuCoin is a young exchange as it only went live in August 2017, but its team, which includes members from GF Securities, Ant Financial, Youling, Jianbang Communication, and iBOX PAY, are blockchain veterans with a history going back to 2011. 

KuCoin’s founders began building the technical architecture for KuCoin in 2013 and finally launched the exchange 4 years later. KuCoin has worked its way up from an obscure exchange to a leading crypto exchange with more than 400 trading pairs and nearly $1.5 billion in monthly trading volume. The exchange accepts traders from all over the world, including US residents, and is strictly a crypto-to-crypto exchange. 

To provide some more context about KuCoin, the exchange benefits from the following features: 

• A clean layout
• Low trading and withdrawal fees
• Various order types
• An advanced KuCoin API
• Reliable security solutions
• A mobile app for iOS and Android
• Both simple and advanced trading interfaces

KuCoin Shares (KCS) Supply and Distribution 

As for the exchange’s utility token, KuCoin Shares (KCS) is an ERC-20 token traded primarily on the KuCoin exchange with listings on only a couple of other small exchanges. The KCS tokens were distributed through an ICO 1 month after Kucoin launched. The distribution is as follows: 35 percent (70 million KCS) went to the founders of KuCoin, 15 percent (30 million KCS) went to angel investors in the exchange, and 50 percent (100 million KCS) was sold to investors. 

According to the KCS whitepaper the 35%, or 70 million KCS, that was distributed to the founders is locked up until September 2021. As well, the 30 million coins given to angel investors were also locked up until September 2, 2019. 

The initial total supply of KCS was set at 200 million. However, the supply is decreasing as each quarter, the exchange repurchases KCS tokens with about 10% of the exchange’s profits and then burns the purchased KCS tokens. KuCoin will continue to buy back and burn KCS until the total supply is 100 million tokens. Currently, the total supply of KuCoin Shares is 177,801,051 KCS and the circulating supply is 87,801,051 KCS. 

Purpose of KuCoin Shares (KCS)

As the native currency of the KuCoin crypto exchange, KuCoin Shares has multiple use cases and offers its holders various benefits. 

See below, the beneficial use cases of KuCoin Shares (KCS):

Incentives Bonus
The primary use case for KCS, which makes it different from most other cryptocurrencies, is that it pays out dividends to holders. Just like how certain stocks or shares of a company pays out dividends, KCS holders receive daily dividends. 

KuCoin distributes 50% of the trading fees to KCS holders in the form of dividends every day. The more KCS you hold, the more dividends you receive. 

To provide an example, let’s say you hold 10,000 KCS and KCS is trading at $1.05. Now, let's say KuCoin’s 24 hr trading volume is $27,780,003. 

According to KuCoinShares.com, you would receive a dividend of 3.04086 KCS that day or $3.20 USD. If we extrapolate that with the same metrics, you would make 31.3 KCS ($22.40) per week, 94.3 KCS ($99.10) per month, and 1109.9 KCS ($1,166.50) per year. 

Therefore, your return on investment (ROI) would be 11.1% just for holding KuCoin Shares (KCS). This ROI is more than twice as much as the average stock dividend yield of 4.92%, and more than four times as much as the average S&P 500 stock dividend just of 2.5%.

Increasing Price
Another benefit of holding KuCoin Shares is that its price is expected to increase over time, especially as the exchange platform grows its user base and trading volume increases. 

A contributing factor to increasing the price of KCS is the Kucoin buyback program, where each quarter, the exchange repurchases KCS tokens with about 10% of the exchange’s profits and then burns the purchased KCS tokens. The exchange will do this until there are just 100 million KCS tokens, which is cutting the supply in half from its initial 200 million KCS supply. 

Therefore, KCS holders profit from the success of the exchange as KCS is burnt and used as the native currency of the exchange. 

Reduced Trading Fees
Besides being paid out as dividends, holding KCS tokens also reduce trading fees. For instance, if you hold 1000 KCS tokens you receive a 1% discount on trading fees. If you hold 10,000 KCS you receive a 10% discount, if you hold 20,000 KCS you receive a 20% discount, and if you hold 50000 KCS you receive a maximum discount of 30%.

Exclusive Promotions, Offers, and Rewards

An additional incentive to buying and holding KCS tokens is to be automatically qualified for exclusive KuCoin promotions, offers, and rewards. For instance, when a new coin gets listed on the exchange, KCS holders may be entitled to airdrops based on the number of KCS they hold. 

Also, KCS holders will have exclusive access to KuCoin trading tournaments, competitions, and other events for a chance to win more KCS, trips, cash prizes, and other cryptocurrencies.

Payments
Like other cryptocurrencies such as Bitcoin, Bitcoin Cash, Litecoin, etc, KuCoin Shares can be used for payments and transactions. KuKoin has partnered with a number of different payment providers to enable users to pay for various products and services with KCS. (I delve more into this in the partners and adoption section.)

KuCoin Shares Issues and Controversies

KuCoin Shares itself is, for the most part, free from any major controversies and issues. On the other hand, the KuCoin exchange is not. This poses a problem for KuCoin Shares because its success is highly dependent on the exchange. 

In February 2019, KuCoin reportedly asked projects at risk of being delisted to pay substantial volume-boosting fees. While it has been rumored that crypto exchanges often fake volumes with was trading, this is generally the case for lesser-known, smaller exchanges. Therefore, if these rumors are true, it doesn’t look good on KuCoin. 

Another KuCoin controversy was in August 2018, which centered around KuCoin’s Hong Kong offices being empty. During this time, there was much controversy and speculation that KuCoin was in the midst of an exit scam. Many people believed this because the KCS price had dropped significantly from its all-time high. However, basically every cryptocurrency had dropped 80 - 90 percent from their all-time highs, so this fear was irrational. 

All in all, the biggest issue with KuCoin Shares is that the token’s success is highly dependent on the success of the KuCoin crypto exchange. However, this is the same with all exchange-based tokens and yet they have performed very well because they offer investors great value propositions. Also, KuCoin has yet to suffer from any major exchange hacks, which is becoming somewhat of a rarity in today’s crypto landscape. 

KuCoin Shares Partnerships & Adoption

KuCoin Shares currently ranks 52 out of nearly 3000 cryptos on CoinMarketCap. Therefore, KCS is rather successful and has become widely adopted throughout the cryptocurrency ecosystem. Institutional investors heavily invested in KCS include IDG Capital, Matrix Partners, NGC, and LFG Global. 

Apart from investors, the KuCoin exchange has acquired multiple strategic partnerships that help to grow and build the KuCoin exchange and in turn, benefit the native KuCoin Shares exchange token. 

See below, KuCoin’s partnerships:

• Simplex - A payment provider that enables credit card payments. KuCoin users can purchase crypto with their credit cards through Simplex.
• Apex Trader - An automated crypto trading platform.
• Arwen - A Boston-based startup providing non-custodial trading products and securing users’ trading operations.
• ADAMANT Messanger - A decentralized, anonymous and secure blockchain messaging platform enabling users to transfer KCS to anyone in chats.
• CoinSwitch - A cryptocurrency exchange aggregator with over 275+ coins.
• EthLend - Enables users to get a loan using KCS.
• AavePay -  Cash out KCS to pay private expenses.
• PlayGame - Use KCS to play online games & buy KCS from 22,000 vendors in Indonesia.
• SwirlPay - Use KCS to shop online without any extra fees.
• CoinPayments - Accept KCS from your customers.
• Whopper - Get a KCS cold storage card.
• Pundi X - Use KCS in offline stores globally.

Conclusion

As far as exchange-based tokens go, KuCoin Shares (KCS) is definitely one to keep your eye on. Unlike Binance’s BNB token, KCS has yet to really pop in price. This is largely due to the lack of new retail traders entering the market. However, once Bitcoin surpasses its all-time high, new retail traders will begin flooding in and KuCoin and KCS stand to gain tremendously. 

KuCoin Shares offers its holders a wide range of highly attractive benefits including daily dividends, reduced trading fees, exclusive promotions, and more. Therefore, KCS holders have a lot to gain by simply buying and holding KCS. It will be interesting to see how this coin progresses as the crypto industry grows and expands. After all, it is still very early on for a coin like KCS and if the KuCoin exchange continues to grow, holding KCS will become very profitable.

What do you think about KuCoin Shares (KCS)? Do you think it's a good investment or is it too risky based on its dependence on the KuCoin exchange? Let us know what you think in the comment section below.