SUMMARY

Binance Coin (BNB) is the native token for Binance Holdings Limited, a multi-functional platform that allows users to invest in incubated ICOs, trade assets on the Binance exchange, or learn more about the industry within the Binance Academy. Currently based out of Malta, Binance looks to dominate the exchange industry as they currently rank #2 by adjusted daily volume [1]. The exchange offers users the opportunity to take part in a marketplace of digital assets that has a sufficient amount of liquidity to trade quickly and at a fair market price. The BNB token is currently built upon the Ethereum blockchain as an ERC-20 token, but has plans to move to its own blockchain within the next few years. The first step of this journey is their decentralized exchange, which looks to be built upon the Binance blockchain when the swap is completed [2].

Sentiment analysiS

  • Open source: Not at the moment, but coming soon.

  • Github depositories: 10 total [3]

  • Github commits: 2,102 commits total [3]

  • Telegram: 29 telegram channels (25 languages, 1 announcements, 2 info, 1 academy)

    • Arabic: 2,691 // Chinese: 67,597 // English: 80,758 // Czech/Slovakia: 528 // Dutch: 2,013 // Fillipino: 2,079 // French: 1,438 // German: 1,824 // Hebrew: 169 // Indian: 2,530 // Italian: 2,359 // Japanese: 4,311 // Korean: 2,667 // Mongolian: 876 // Nigeria: 448 // Polish: 1,268 // Portuguese: 1,687 // Romanian: 277 // Russian: 11,277 // South Africa: 437 // Spanish: 4,392 // Turkish: 5,292 // Ukrainian: 465 // Vietnamese: 5,118 // Thailand: 248 // English-Info: 2,095 // Chinese-info: 509 // Binance Academy: 1,427 // Total: 268,358 [8]

  • Twitter: 914,000 Followers (92% real followers via TwitterAudit.com) [7]

  • Facebook: 81,547 Followers [4]

  • Reddit: 22,200 Subscribers [5]

  • Steem: 1,548 Followers [6]

  • Blog: High Activity

TEAM

Binance Holdings Limited was officially formed on June 14, 2017 in China before beginning sales of BNB on July 1 of the same year. Version 0.1 was released during the ICO to allow users a chance to try trading on the platform before investing further. This is notable as a large portion of projects have yet to deliver on their promises while Binance had a completed project from the start of their token sale. Following the token sale and China’s ban on cryptocurrency in September of 2017, the team moved their servers and operations to Japan to avoid sanctions. They would later move to Malta (2018) for their base operations which has been paramount in their rapid expansion, allowing them to avoid major regulations by China and Japan.

The team is led by crypto personality and CEO Changpeng Zhao (prominently known as CZ or @cz_binance on twitter) who has had an illustrious background prior to founding Binance. CZ previously founded Fusion Systems in 2005, a Shanghai company that focused on high-frequency trading systems for brokers and traders. He then went on to be an original member of Blockchain.info’s team in 2013, followed by a stint as CTO of Okcoin (a top 100 exchange by adjusted volume) for part of 2015. Following the ICO in August of 2017, Yi He was also added as a co-founder and the Chief Marketing Officer. Yi He came from a background that included serving as co-founder and VP for OKcoin which reached a high of 60% of the Chinese cryptocurrency market trading field. Both CZ and He were prominent figures in the Chinese Internet industry, so having them at the forefront has helped create trust in the company from day one. Besides CZ and He, Roger Wang is listed as the other core team member (CTO) via the whitepaper and also had experience leading tech departments at major firms; at Morgan Stanley he helped create low latency algorithmic trading systems to profitably serve clients such as Blackstone and the Wellington Fund [9]. Their whitepaper only had six team members with another twenty-three known advisors [9]. At the time of writing, they no longer list their full team on their site but there are now over 560 employees listed as currently working at Binance via LinkedIn [11]. In turn, Crunchbase now lists their four core team members as being CZ, He, Ted Lin (CGO), and Alejandro Isaza. There are many employees that cover support on the platform as well as marketing initiatives but those who run the front offices have extensive backgrounds in high frequency trading, allowing Binance to stand out as the fastest and possibly most trustworthy exchange.

utility & incentive Schemes

For now, Binance needs the BNB token because it incentivizes users to trade on their exchange with the opportunity to cut their fees by using BNB. The fee structure for trading on Binance while using BNB resulted in a 50% discount for year one, a 25% discount now in year two, with the reduction then decreasing to a 12.5% and 6.25% discount in years three and four respectively [9]. Following year four, BNB will no longer be used as a fee reduction but Binance looks to be operating as a decentralized platform by this time (powered by BNB blockchain). Going forward, Binance aims to swap the remaining tokens to their main chain which will look to power smart contracts, dApps, transaction fees, and to move away from high gas prices on the Ethereum blockchain. The platform uses quarterly profits to determine a buyback amount which will take place up until 100,000,000 tokens (or half of the total supply) are bought back and burned. In this sense, burnt tokens can never be transacted again which in turn drops the total supply and increases the value of each BNB given that no new tokens can be minted.

Binance currently resides in the digital exchange/trading sector of the cryptocurrency market, but they are constantly making strides to broaden their user base through other platform functions and jurisdictions around the world. Their native token, BNB, is ranked amongst the top 10 cryptocurrencies by market cap amassing a total of $1.3 billion at the time of writing. It is currently the second rated exchange by volume and besides trading fees, those who use the platform can also use BNB for withdrawal fees, listing fees (for new companies looking to list their coin), margin fees, or any other on-platform purchases. [9]  

tokenomics

Binance conducted a public token sale starting on July 1, 2017 and was sold out by July 21, 2017 raising $15 million in the process. From July 1-7, the price for purchase was 2700 BNB per 1 ETH with the price increasing to 2500 BNB and then 2300 BNB per 1 ETH for the periods July 7-14 and July 15-21 respectively. 50% of the total 200 million (100 million) were distributed in the ICO while the remaining supply was distributed as 40% (80 million) to the founding team and 10% (20 million) for angel investors. Team funds are vesting with 20% (16 million) unbound by initial token release and vested at the same rate after each year for the following 4 years post launch. The money raised during the ICO was used to further develop the platform from v.01 by using 35% to build and upgrade the system (recruiting, training, and development), 50% on branding and marketing, with 15% being kept in a reserve for future emergencies or unexpected situations. [9]

BNB Token Allocation at ICO

BNB token allocation.png

ICO Use of Proceeds

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TOKEN SALE STRUCTURE (2017)

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BNB is listed as a primary trading pair on the Binance exchange and is also traded on most decentralized exchanges that trade on the Ethereum blockchain (since it’s an ERC-20 token). Lbank, Indodax, and HitBTC are notable centralized exchanges that also have a BNB pair listed. According to Etherscan.io, BNB is currently at a supply of 189,175,490.242498551714388965 following the company buybacks and burns since launch [12]. CoinMarketCap has the recorded circulating supply as being 141,175,490 BNB which accounts for the remaining locked up team supply of 48,000,000 tokens [1]. Although there are over 307,000 wallets holding BNB, that number pales in comparison to the 7.1 million active wallets on the Bitcoin network, according to BitcoinMarketJournal, revealing that adoption of the token is rising but not at a decentralized level [13]. It is worth noting that investors in the ICO who had purchased BNB would have received nearly a 6,000% ROI if they held until present day. [10]

Market opportunity

Trustworthy cryptocurrency exchanges are difficult to come by within an industry that is still so young and unregulated. In 2018 alone, nearly $1 billion of customer funds had been stolen by hackers off various exchanges. With this in mind, Binance has set out to offer unparalleled user experience to receive a trustworthy status. They are working to offer not only spot trading, but margin trading, futures, an anonymous instant trade portal, as well as their final goal of a decentralized (on-chain) exchange. [9]

            Already having disrupted the digital exchange market, Binance looks to take control of the top spot for trading volume. Even while in a bear market, the reported daily volume traded resides around $20,000,000,000 USD according to CoinMarketCap [1]. The 24-hour volume for Binance at time of writing sits right around $500,000,000 USD which amounts to about 2.5% of daily traded cryptocurrency. This shows that although they are currently ranked as the second most frequently used exchange, they still have room to grow to dominate the market.

            As Binance tries to conquer the entire exchange industry, the territory comes with a few well-known competitors that hold jurisdictional advantages as well as a plethora of others that amount to over 100 total platforms. The well-known purchasing platform Coinbase has slipped in the rankings while lesser known companies such as Bit-Z and BitMart enter the top 10. [1] Meanwhile, Coinbase has allowed U.S. customers to purchase and trade through their platform using debit cards and banks but the expansion of companies such as Binance have started to slow their growth.

            At the time of writing, Binance has completed a partnership with Simplex to allow users to purchase crypto using a credit card [14]. Unlike Coinbase, who had to suspend credit card purchases, Binance has been able to acquire more users following the move and has seen the value of BNB rise in recent days. As Binance continues to expand through acquisitions and partnerships (such as acquiring the Trust Wallet and partnering with Simplex) they will continue to grow and control a larger share in comparison to other financial platforms. They have even launched subsidiaries in newer financial markets such as Uganda and moved their operations base to Malta to benefit from better regulations and laws on blockchain technology. With all this in mind, the opportunity resides in the potential to build upon the reputation Binance already has. They are considered the premier place to list a new project for trade by many in the crypto sphere, and if they hold that sentiment then it will spell good fortune for a company looking to disrupt the most crowded sector in the space.

Current status and adoption analysis

Binance achieved their major goals for 2018 while also continuing to build for the future. They have adopted the expression BUIDL as a variation of the term HODL (Hold On for Dear Life) to show that even in bear markets they are working to set themselves up for a time when adoption takes off. Their overall plan is to evolve into a DEX (decentralized exchange) on their own main chain and they have already began testing, all while continuing to operate as a top exchange in the space. Their DEX is expected to transact in 1-second confirmation times by building on their own chain. The expected release date for both the chain and the DEX has yet to be announced but it will be sometime in 2019, according to CEO Changpeng Zhao. They have also expanded to additional jurisdictions with the set goal of having a subsidiary on every continent while also making fiat-crypto a much easier experience. [15] There are few companies who could compare to the growth and amount of production Binance has seen since their ICO, but with that said there still remains a barrier to their increasing dominance. The most notable barriers are the current adoption of cryptocurrency technologies and the diminished number of traders in the space. For a company that holds onto a top three position on daily trade volume, this is not as big a concern day to day but for long term growth it is crucial. Overall, Binance is one of the most frequently used and popular digital exchanges in the entire industry. It stands out as easy to use with an unparalleled user experience, a simple yet impressive design, and a platform that works to keep the user immersed in the cryptocurrency world. It will be interesting to see which new innovations Binance will bring to fruition going forward.

References 

[1] https://coinmarketcap.com/rankings/exchanges/

[2] https://en.wikipedia.org/wiki/Binance

[3] https://www.github.com/binance-exchange

[4] https://www.facebook.com/binanceexchange

[5] https://www.reddit.com/r/binanceexchange

[6] https://www.steemit.com/@binanceexchange

[7] https://www.twitteraudit.com/binance

[8] https://www.binance.com/contactUsCn.html#telegrams

[9] https://www.binance.com/resources/ico/Binance_WhitePaper_en.pdf

[10] https://icorating.com/ico/binance-bnb/

[11] https://www.linkedin.com/search/results/people/?facetCurrentCompany=%5B%2213336409%22%5D

[12] https://etherscan.io/token/0xB8c77482e45F1F44dE1745F52C74426C631bDD52#balances

[13] https://www.bitcoinmarketjournal.com/how-many-people-use-bitcoin/

[14] https://www.binance.com/en/blog/297658163885826048/Binance-Enables-Credit-Card-Payments-Through-Simplex-Partnership-Furthering-Crypto-Adoption-Worldwide

[15] https://www.binance.com/en/blog/299119938742542336/Binance-Weekly-Report-Use-Credit-Cards-on-Binance-plus-Token-Sales-and-More