3 Reasons Binance Chain (BNB) Soared 66% Since Crypto Market Crash
BNB, the native token of Binance’s BNB chain, has jumped 66% from a low of $183 in mid-June. The move consolidates its position as the third-ranked cryptocurrency (when stablecoin market caps are removed) and reflects a market capitalization of $50 billion. BNB has outperformed the broader altcoin market cap following a devastating 73% correction that began in November 2021.
The chart above shows how this smart contract blockchain network suffered during the recent market collapse and how similar movements occurred across the altcoin market. Now that the BNB price has reached $300, let’s take a look at how the asset is positioned compared to July 2021 when it traded for the same price.
Is BNB’s market value and valuation justified?
Back in July 2021, the altcoin market cap was 21% higher at $740 billion. Bitcoin (BTC) and Ether (ETH) had already established themselves as market leaders, but the battle for the third position was far from settled, at least in terms of total value.
Despite still being the third largest cryptocurrency, BNB’s market cap was $47 billion, while Cardano (ADA) was valued at $46 billion. Currently, no altcoin remotely matches its dominance, and the gap has widened by more than $30 billion.
Smart contracts form the basis of all decentralized applications (DApps), including decentralized finance, games, marketplaces, social networks, and many other use cases. So what other success metrics are there besides the number of active users using addresses as proxies?
PancakeSwap, BNB Chain’s decentralized exchange, has 1.98 million active addresses. The number is so massive that it is not enough to collect the next four competitors. According to the data, second to BNB Chain is 1inch Network, which has 91% fewer users.
For those asking if the BNB Chain is a one-trick pony, the network has a couple of games that have 83,000 or more active addresses each and 78,450 using the 1-inch network. Asking whether PancakeSwap really holds that many users is a valid question, but the Ethereum network has only three DApps that exceed 30,000 active addresses, namely Uniswap, OpeanSea and MetaMask Swap.
Smart contract deposits differentiate BNB Chain from its competitors
One could argue that the total value of users’ contributions to smart contracts is crucial in determining a network’s success. But while it is very valid for financial applications, there is not much reason for marketplaces, games, collectibles and social networks to hold large deposits.
Currently, Ethereum is the absolute leader, and the DApp that hosts the algorithmically-backed DAI stablecoin has deposits worth $8.25 billion. Still, this is more than justified by Ether’s market cap of $208 billion, which is over four times that of BNB at $50 billion.
Data shows a consolidated third place for BNB Chain with $5.5 billion in TVL, which is more than double Avalanche (AVAX) and Polygon (MATIC).
Binance leads in trading volume
When considering BNB’s valuation, especially compared to smart contract blockchains, there must be a different methodology because the token has additional utility on the Binance exchange. Furthermore, by offering discounted trading fees, opportunities at the token sale launch pad, and exclusive staking opportunities, BNB can stand out among its competitors.
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Data from SimilarWeb shows that Binance had 300 million website visitors in 30 days compared to 121 million from Coinbase. Consequently, if FTX Token (FTT) has a market cap of $5 billion, BNB should be five times bigger just from Binance’s utility offering.
Therefore, when making a valuation comparison with smart contract platforms, analysts should discount nearly half of BNB’s $50 billion market cap for a similar calculation. The BNB token seems reasonably priced due to the third place (when stablecoins are removed) in the ranking of global market capitalization, the leadership in DApps users, the third place in terms of TVL deposits and absolute dominance of exchange volumes.
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