BNB, the native token of Binance’s BNB Chain (BNB), has bounced 66% from its $183 low in mid-June. The move consolidates its position as the third-ranked cryptocurrency (when stablecoin market caps are removed) and reflects a $50 billion market capitalization. BNB has outperformed the broader altcoin market capitalization after a devastating 73% correction that began in November 2021.
Is BNB’s market cap and valuation justified?
Back in July 2021, the altcoin market capitalization stood 21% higher at $740 billion. Bitcoin (BTC) and Ethereum (ETH) had already established themselves as the market leaders, but the dispute for the third position was far from settled, at least in terms of total value.
Smart contracts form the foundation of all decentralized applications (DApps), including decentralized finance, gaming, marketplaces, social networks and many other use cases. So what other success metrics are there besides the number of active users using addresses as a proxy?
For those questioning whether BNB Chain is a one-trick pony, the network holds a couple of games that have 83,000 or more active addresses each and 78,450 that use 1inch Network. Asking whether or not PancakeSwap really holds that many users is a valid question, but the Ethereum network only holds three DApps surpassing 30,000 active addresses, namely Uniswap, OpeanSea, and MetaMask Swap.
Smart contract deposits set BNB Chain apart from its competitors
One might argue that the total value of users’ deposits in smart contracts are critical to determining a network’s success. However, while it is highly valid for finance applications, there’s not much reason for marketplaces, games, collectibles and social networks to hold large deposits.
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 volumes
When accounting for the BNB’s valuation, especially in comparison to smart contract blockchains, there needs to be a different methodology because the token has additional utility at Binance exchange. Furthermore, by providing discounted trading fees, opportunities at the token sales launchpad and exclusive staking opportunities, allows BNB to stand out among its competitors.
Related: Coinbase eyes long-term growth of subscription revenue, NFTs still a focus
Therefore, when making a valuation comparison with smart contract platforms, analysts should discount nearly half of BNB’s $50 billion market cap for an equivalent metric. BNB token seems fairly priced due to its third place (when stablecoins are removed) in global market capitalization ranking, its leadership in DApps users, third place status in terms of TVL deposits and absolute dominance of exchange volumes.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Leave A Comment