BNB, the native token of Binance’s BNB chain, rebounded 66% from its mid-June low of $183. The move solidifies its position as the third-largest cryptocurrency (when stablecoin market caps are removed) and reflects a market cap of $50 billion. BNB 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 moves have occurred in the altcoin market. Now that the price of BNB has reached $300, let’s take a look at how the asset is positioned compared to July 2021, when it traded at the same price.
Is the market capitalization and valuation of BNB justified?
In July 2021, the market capitalization of altcoins was 21% higher at $740 billion. Bitcoin (BTC) and Ether (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.
Although still the third-largest cryptocurrency, BNB’s market capitalization was $47 billion, while Cardano (ADA) held a valuation of $46 billion. Currently, no altcoin remotely matches its dominance and the gap has widened by over $30 billion.
Smart contracts form the basis of all decentralized applications (DApps), including decentralized finance, games, marketplaces, social media, and many other use cases. So what other measures of success 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 aggregating the next four competitors is not enough to match it. According to the data, the second of BNB Chain is 1inch Network, which has 91% fewer users.
For those wondering if BNB Chain is a one-trick pony, the network contains a few games that each have 83,000 or more active addresses and 78,450 that use the 1-inch network. Asking if PancakeSwap really holds 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 repositories set BNB Chain apart from 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 hold large deposits.
Currently, Ethereum is the absolute leader and the DApp hosting the algorithm-backed DAI stablecoin has $8.25 billion in deposits. Still, this is more than justified by Ether’s $208 billion market cap, which is more than four times larger than BNB’s at $50 billion.
The 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 in trading volumes
When accounting for BNB valuation, especially when compared to smart contract blockchains, there must be a different methodology as the token has additional utility on the Binance exchange. Additionally, offering reduced trading fees, token sales launchpad opportunities, and exclusive staking opportunities sets BNB apart from its competitors.
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Data from SimilarWeb shows that Binance had 300 million visitors to its website in 30 days compared to 121 million for Coinbase. Therefore, if FTX Token (FTT) has a market capitalization of $5 billion, BNB should be five times larger just because of Binance’s utility offering..
Therefore, in a valuation comparison with smart contract platforms, analysts would discount nearly half of BNB’s $50 billion market capitalization for an equivalent metric. The BNB token seems reasonably priced due to its third place (when stablecoins are removed) in the global market cap rankings, its leadership among DApps users, its third place status in terms of deposits TVL and its absolute dominance of trading volumes.
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