The BNB token has a $50 billion market cap and is up 66% since the crypto market crash, but what is behind the altcoin’s huge recovery?
BNB, the native token of the Binance BNB network, has recovered 66% from the mid-June low of $183. The move solidifies its position as the #3 cryptocurrency (if stablecoin market cap is removed), reflecting a $50 billion market cap. BNB outperformed the broader altcoin market cap after a devastating 73% correction starting in November 2021.
BNB token on FTX (blue) and total market cap without BTC (orange). Source: Trading View
The chart above shows how this smart contract blockchain network suffered during the recent market downturn, and how similar changes occurred in the altcoin market. As the price of BNB hit $300, let’s see how the asset is positioning compared to July 2021 when it traded at the same price.
Is the market cap and valuation of BNB justified?
As of July 2021, the altcoin market capitalization has grown by 21% to $740 billion. Bitcoin (BTC) and Ether (ETH) have already established themselves as market leaders, but the battle for third place was far from over, at least in terms of aggregate value.
Top coins by market capitalization as of July 4, 2021. Source: Coinmarketcap.
Although BNB is still the third largest cryptocurrency, it had a market capitalization of $47 billion while Cardano (ADA) was valued at $46 billion. Currently, no altcoin even comes close to 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. Apart from the number of active users proxying addresses, what other indicators of success are there?
Most active DApps addresses in 30 days, no gambling. Source: DappRadar
PancakeSwap, the BNB Chain decentralized exchange, has 1.98 million active addresses. This number is so high that the sum of the next four participants is not enough to reach it. According to the data, the second largest BNB network is 1inch Network, which has 91% fewer users.
For those wondering if BNB Chain is a one-trick pony, there are several games on the network each with 83,000 or more active addresses, and 78,450 using the 1-inch network. Whether or not PancakeSwap really has that many users is a legitimate question, but there are only three DApps on the Ethereum network with over 30,000 active addresses, namely Uniswap, OpeanSea, and MetaMask Swap.
Deposits with smart contracts set BNB Chain apart from the competition
It can be argued that the total value of user deposits in smart contracts is critical to the success of the network. While this is very relevant for financial apps, marketplaces, games, collectibles, and social media, there is little reason to keep large deposits.
The total cost of the blocked rating, USD. Source: Defillama
Currently, Ethereum is the absolute leader, and the DApp hosting the algorithm-based DAI stablecoin has $8.25 billion in deposits. However, this is more than justified by Ether’s $208 billion market cap, more than four times that of BNB ($50 billion).
The data shows a consolidated third place for the BNB network with $5.5 billion in TVL, more than double Avalanche (AVAX) and Polygon (MATIC).
Binance Leads in Trading Volume
When considering the valuation of BNB, especially when compared to smart contract blockchains, a different methodology needs to be applied as the token has added value on the Binance exchange. In addition, BNB can differentiate itself from its competitors by offering discounts on trading fees, launch pad opportunities for token sales, and exclusive staking opportunities.
Related: Coinbase aims for long-term subscription revenue growth, NFTs remain in focus
Site visitors in the last 90 days. Source: Secret Research.
SimilarWeb data shows that Binance had 300 million visitors in 30 days, compared to Coinbase’s 121 million. Therefore, if FTX Token (FTT) has a $5 billion market cap, BNB should be 5 times larger based on Binance’s offer alone.
Therefore, when comparing valuation with smart contract platforms, analysts should
