Binance Coin (BNB): Comprehensive Analysis and Valuation

Author: Multicoin Capital (Spencer Applebaum, Tushar Jain, Kyle Samani)

Introduction

Multicoin Capital is a thesis-driven crypto fund investing in tokens that reshape global economies. We conduct rigorous research on blockchain protocols, teams, and market opportunities, leveraging public market liquidity to achieve venture capital economics.

Report Disclosure

Disclaimer: Multicoin Capital holds BNB tokens. Adhering to ethical guidelines, Multicoin Capital follows a "restricted trading policy" for at least three days post-report publication. During this period, no executive may trade the mentioned assets.

All opinions herein reflect Multicoin’s views. Information is provided "as-is" without warranties. This document is for informational purposes only and does not constitute investment advice.

Table of Contents

1. Binance Overview

2. BNB Investment Thesis

   • Centralized Exchange (CEX)
   • Fiat Support
   • Organizational Structure
   • Binance Chain
   • BNB Tokenomics
3. Centralized Exchange Landscape
4. Binance Trading Metrics

5. Growth Opportunities

   • Advanced Financial Products
   • Binance Chain
   • Fiat-Crypto Gateways
6. Regulatory Arbitrage
7. Risks
8. BNB Utility & Valuation
9. Conclusion

Binance Overview

Binance is a Malta-registered crypto trading platform launched in July 2017. It has grown into the world’s largest crypto exchange by volume, processing 36.6% of global crypto spot trades in December 2018 (adjusted for wash trading).

Key Stats:

• Daily Volume: $803M (Dec 2018)
• Pairs Listed: 435 across 164 tokens
• Users: 10M+
• Employees: 400+ across 43 countries

BNB Investment Thesis

1. Centralized Exchange Dominance

Binance’s CEX boasts unparalleled liquidity, low fees (0.015% maker/0.030% taker), and robust API performance (1.4M+ orders/sec). Its network effect attracts 82% of top-50 token trading volumes.

2. Fiat Expansion

Binance plans to launch 5–10 fiat exchanges by 2025, targeting underserved regions (e.g., Uganda, Jersey, Singapore). Recent additions include GBP/EUR support and Visa/Mastercard integrations.

👉 Explore Binance’s fiat gateways

3. Binance Chain & DEX

The upcoming Binance Chain will feature a native DEX, combining CEX liquidity with decentralized security. Validators will earn fees in BNB, incentivizing token utility.

4. BNB Token Utility

• Fee Discounts: 25%–60% discounts for BNB-paid fees.
• Buyback Burns: 20% of profits used quarterly to burn BNB ($125M burned to date).
• Staking: Future staking on Binance Chain to earn transaction fees.

Centralized Exchange Landscape

Top Exchanges (Adjusted Volume):
| Exchange | Daily Volume | Pairs | Fiat Support |
|----------------|-------------|-------|-------------|
| Binance | $803M | 435 | Yes |
| Bitfinex | $400M | 330 | Yes |
| Coinbase Pro | $159M | 61 | Yes |

Key Differentiators:

• Lowest fees
• Highest liquidity
• Robust API and multilingual support

Growth Opportunities

1. Derivatives & Margin Trading

Binance may expand into derivatives (e.g., futures, options), capturing 25% of crypto’s $240B OTC market.

2. Binance Chain

A Tendermint-based blockchain offering:

• 1-second finality
• IBC protocol support
• DEX with hardware wallet integration

3. Fiat Onramps

Targeting hyperinflation economies (e.g., Argentina, Venezuela) to boost adoption.

👉 Learn about Binance’s global fiat strategy

Risks

1. Regulatory Scrutiny: Potential crackdowns on unregistered securities.
2. DEX Competition: Rivals (e.g., Bitfinex, Coinbase) may launch competitive DEXs.
3. Execution Risk: Binance Chain’s untested consensus model.

BNB Valuation

• Fully Diluted Market Cap: $1.2B
• Yield: 4.6% (2018)
• Catalysts: DEX rollout, staking rewards, fiat expansions.

Valuation Framework:
| Metric | Value |
|----------------------|---------------|
| Annual Buyback | $88M (2018) |
| Fee Discount Utility | 25%–60% |

Conclusion

Binance’s strategic initiatives—fiat gateways, Binance Chain, and BNB’s deflationary model—position it for long-term dominance. BNB’s current valuation ($10.06) undervalues its potential as Web3’s leading DEX token.

Final Thought: Binance is transitioning from a CEX to a decentralized autonomous entity (DAC), aligning incentives with BNB holders.

For the latest updates, visit Binance’s official site.

FAQ Section

Q1: How does BNB’s burn mechanism work?
A: Binance uses 20% of quarterly profits to buy back and burn BNB until 100M tokens are destroyed.

Q2: What’s Binance Chain’s advantage over Ethereum DEXs?
A: Faster transactions (1-second finality) and built-in liquidity bridges from CEX.

Q3: Is BNB a security?
A: Evolving regulatory clarity may classify it as a utility token, especially post-DEX launch.