Opinion: In terms of token price discovery, DEX has replaced the venture capital market

According to an analyst known by the alias Ignas, PENGU and CGPT are the only tokens among recent launches that haven't experienced a significant crash after listing. As of the time of writing, PENGU is trading at $0.028, which is a 60% decline from its listing price of $0.07 on the exchange, while CGPT has dropped 4.7% since its listing on January 10.

Meanwhile, memecoin Simon Cat (CAT) and Magic Eden's native token ME have both dropped about 70% since their listings.

Ignas views this as a positive shift for the market: “Previously, price discovery happened in the private venture capital markets, with CEXs (centralized exchanges) providing exit liquidity. Now, DEXs (decentralized exchanges) are responsible for price discovery, while CEXs handle exit liquidity.”

Ignas further emphasized this new dynamic by using the listing of Velodrome (VELO) as an example. After a CEX created a trading pair for VELO on its platform, its price dropped nearly 70%, with the current price standing at $0.1154 as of the time of writing.

The reason behind this shift is that traders, classified as "smart money," are taking the lead on decentralized exchanges. Moreover, Ignas pointed out that having exit liquidity flows, such as those from centralized exchanges, is healthy for the market.