BNB, the native token of Binance’s BNB chain, has rebounded 66% from its low of $183 in mid-June. The move cements its position as the number three cryptocurrency (when stablecoin market caps are removed) and reflects a market capitalization of $50 billion. BNB has outperformed the broader altcoin market cap after a devastating 73% correction that began in November 2021.
The chart above shows how this smart contract blockchain network suffered during the recent market crash and how similar movements occurred throughout the altcoin market. Now that the price of BNB has reached $300, let’s take a look at where the asset stands compared to July 2021, when it was trading at the same price.
Is the market cap and valuation of BNB justified?
As of July 2021, the altcoin market capitalization stood at 21%, at $740 billion. Bitcoin (BTC) and Ether (ETH) had already established themselves as market leaders, but the dispute for the third position was far from resolved, at least in terms of total value.
Despite still being the third largest cryptocurrency, BNB’s market capitalization was $47 billion, while Cardano (ADA) had a valuation of $46 billion. Currently, no altcoin even remotely matches its dominance and the gap has widened by more than $30 billion.
Smart contracts are the foundation for all decentralized applications (DApps), including decentralized finance, gaming, marketplaces, social media, and many other use cases. So what other success metrics are there besides the number of active users using the addresses as a proxy?
PancakeSwap, the BNB Chain decentralized exchange, has 1.98 million active addresses. The figure is so massive that the sum of the next four competitors is not enough to match it. According to data, the second ranked after BNB Chain is 1inch Network, which has 91% fewer users.
For those wondering if BNB Chain is a one-trick dog, the network has a couple of games that have 83,000 or more active addresses each and 78,450 that use the 1inch Network. Asking if PancakeSwap really has that many users is a valid question, but the Ethereum network only has three DApps that exceed 30,000 active addresses, namely Uniswap, OpeanSea, and MetaMask Swap.
Smart contract deposits set BNB Chain apart from its competitors
It could be argued that the total value of user deposits in smart contracts is critical in determining the success of a network. However, although it is very valid for financial applications, there is not much reason for markets, games, collectibles and social networks to maintain large deposits.
Currently, Ethereum is the absolute leader and the DApp that hosts the algorithm-backed stablecoin DAI has deposits worth $8.25 billion. Still, this is more than justified by Ether’s market capitalization of $208 billion, which is more than four times that of BNB at $50 billion.
Data shows a consolidated third place for BNB Chain with $5.5 billion in TVL, more than double that of Avalanche (AVAX) and Polygon (MATIC).
Binance leads trading volumes
When accounting for the valuation of BNB, especially when compared to smart contract blockchain networks, a different methodology is needed because the token has additional utility on Binance. Additionally, offering discounted trading fees, launch pad opportunities for token sales, and exclusive staking opportunities allows BNB to stand out from its competitors.
SimilarWeb data shows that Binance had 300 million visitors to its website in 30 days, compared to 121 million for Coinbase. So, if FTX Token (FTT) has a market cap of $5 billion, BNB should be five times bigger just because of Binance’s service offering.
Therefore, when making a valuation comparison to smart contract platforms, analysts should discount nearly half of BNB’s $50 billion market cap for an equivalent metric. The BNB token seems to be fairly priced due to its third place (when stablecoins are removed) in the global market capitalization ranking, its leadership in DApp users, third place in terms of TVL deposits, and the absolute dominance of trade volumes.
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