What is the reason behind the quarterly destruction quantity and coin price of Coin An BNB reaching a new high?

Disclaimer: This article aims to convey more market information and does not constitute any investment advice. The article only represents the author's viewpoint and does not represent the official stance of Mars Finance

Disclaimer: This article aims to convey more market information and does not constitute any investment advice. The article only represents the author's viewpoint and does not represent the official stance of Mars Finance.

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Source: Cointelgraph Chinese

On January 19th, the crypto trading platform Binance announced its BNB destruction status for the new quarter. According to the white paper, Coin An has completed the 14th BNB destruction, with a total destruction of 3619888BNB (including Coin An's destruction of 3609050BNB+10838BNB used in the BNB anti black hole plan), valued at over $165 million. Zhao Changpeng (CZ), the founder of Coin An, also stated that in the future, the destruction speed will be accelerated, reducing the time required from more than 20 years to approximately 5-8 years to complete the destruction of 100 million BNBs. After the announcement, the BNB price immediately reached a historic high of $47.16, particularly outstanding among platform tokens. Behind this, in addition to the reasons for the rise of the market, there should also be several core driving factors pointing to different business sectors of Coin An, including but not limited to: increased transaction revenue, Coin An's new coin mining, expansion of Coin An Chain and Coin An's smart chain territory, etc. This article aims to explore the empowerment of BNB's core values in the above aspects and present some important trends in changes from a data perspective.

BNB Quarterly Destruction, Market Vanguard

In the traditional securities market, there is often a popular saying: "Spring River Water Warm Duck Prophet", which means that securities firms' stocks are like the wind vane of the stock market. When there is a turning point in the market, they often take the lead in starting and pointing out the direction. In the cryptocurrency market, platform currency undoubtedly plays a similar role, and changes in market trading activity can be quickly and directly reflected in its value trend. The reason is that most of the economic model of platform currencies incorporate the design of repurchase/destruction/dividend based on the revenue of the exchange. BNB, as a platform token issued by Coin Security in 2017, has always held the top spot in the platform currency sector and has received the most market attention.

Regarding the rights and interests of holders, Coin On is the first platform to create a "repurchase and destruction" model. Its original white paper stipulated that Coin An would use 20% of the company's quarterly profits to repurchase and destroy BNBs until the total amount was reduced to 100 million. In 2019 and 2020, some details were updated, such as changing the base to the quarterly trading volume of the Coin Security platform, abandoning the team's BNB share and adding it to the BNB quarterly destruction plan starting from the 8th destruction, and the Coin Security Anti Black Hole Plan, which compensates for user losses caused by operational errors during asset transfer.

Understanding the destruction plan is crucial as it reflects the most fundamental yet core aspect of BNB's value at this stage. At this level, industry researchers often use a relative indicator for valuation and observation, namely PricetoBurn, which is commonly used in Chinese to replace the market to sales ratio. Of course, this is not the same as the traditional Price to Sales ratio. Specifically, its calculation formula is the market value of platform coins/the value destroyed in the past year.

Taking this destruction as an example, based on the BNB price of $47, the circulating market value and total market value of the destroyed BNB are $6.631 billion and $8.015 billion, respectively. In addition, the total destruction value in the past year's four destruction records reached $327 million. So, corresponding to the market to sales ratio, we can obtain FloatingPricetoBurn of 19.12 (based on the circulating market value) and DilutedPricetoBurn of 23.11 (based on the total market value), respectively. It can be understood that assuming the platform's transaction volume remains at the same level within the next year, it will take 19.12 years to destroy the remaining BNB in circulation, and 23.11 years to destroy the remaining total amount.

Source of BNB's previous destruction: Coin Security Cartography: Cointelgraph Chinese

The number of BNB destroyed this time has increased by 61% compared to the previous quarter (third quarter of 2020), making it the most destroyed record in the past 14 times. Currently, the total amount has been reduced to 85.27% of its original total issuance amount (200 million), which means about 15% of BNB has permanently disappeared.

Behind the data is a significant increase in platform revenue. If calculated according to the rule of 20% quarterly profit (in fact, it has been changed to 20% of trading volume since Q3 2019), the profit of Coin An in the fourth quarter of 2020 should have reached a historic high of nearly $800 million. From a valuation perspective, BNB's current price to burn ratio is at a low to reasonable level, both based on circulating market value and total market value, below 25 (to some extent comparable to the traditional P/E ratio), and lower than the previous average. This means that the trading business of Coin An can fully support BNB's current valuation and has a strong potential for future growth.

Launchpad and Launchpool are on par to provide benefits for users of Coin Security

In addition to its initial trading business, Coin On has continuously iterated on its own over the past few years, expanding its business landscape achievements to other fields, with Launchpad and Launchpool being important components.

Coin An is a Launchpad business launched on a large scale in early 2019. The industry usually uses the term IEO (Initial Exchange Offering) to describe it, which means that the exchange supports the launch of projects and raises funds in the form of platform tokens. Coin An was not only the platform that pioneered IEO at that time, but also won the competition and imitation of many exchanges. The explosive popularity of its IEO sector directly boosted the long-dormant market situation at that time. According to data from cryptorank.io, from January 2019 to present, Coin On Launchpad has launched a total of 19 projects, raising a total of $71.07 million, with an average of $4.18 million per project. From a return rate perspective, the vast majority of these projects have won considerable returns for IEO investors since they were launched on Coin An. Currently, the average ROI is nearly 10 times, and the average historical highest ROI is as high as 15 times. Based on the same dimension, compared with HuoCoin and OKEx, Coin An IEO performed the best, with each data significantly surpassing its competitors.

Comparison between IEO business platforms Source: cryptobank.io Drawing: Cointelgraph Chinese

While providing support for high-quality blockchain projects, Coin Security IEO is also strongly empowering BNB itself. BNB is the only fundraising currency in the whole process, and prospective investors need to hold a certain number of BNBs and have a holding period requirement, which directly plays the role of platform tokens, and together from the supply and demand side, it provides good price for BNB.

Launchpool is a DeFi mining platform under the Coin An Launchpad sector, which, in Coin An's own words, is "Coin An New Coin Mining - a safer asset reward model". In June of last year, the rise of liquidity on Ethereum attracted unprecedented attention to DeFi. Coin An quickly responded and launched the Launchpool platform in October of the same year to support users in mining token rewards using various assets such as BNB and BUSD. As of January 19, 2020, Launchpool has launched 13 high-quality projects. From the BNB prize pool alone, the total number of BNB deposits reached 87.02 million (an average of 6.69 million), with an average annual return rate of 15%. The total number of participants in the 8 completed projects reached 290000 (an average of 220000).

BinanceLauchpool Project Information Source: Coin Security Drawing: Cointelgraph Chinese

Similar to Launchpad, the Launchpool platform directly increases the utility of BNB, allowing coin holders to easily obtain additional benefits without any complex operations or costs. In addition, projects on Launchpool usually need to be based on or support the Coin Safe Smart Chain (BSC), which also enables the Coin Safe ecological family to continuously absorb new members.

Multiple businesses have blossomed and yielded results, continuously empowering BNB tokens

In terms of technology, business, security, data, and other multidimensional aspects, Coin Security is a rare platform in the industry that will truly invest a large amount of funds and development resources, and pursue innovation without imitating others. There are countless examples, the most representative of which are BinanceChain and BinanceSmartChain independently developed by Coin Security, which have finally blossomed and borne fruit in the past few months.

The decision of Coin An to develop a public chain can be traced back to March 2018, when Coin An stated that in the future, Coin An would achieve a transformation from enterprise to community, and BNB would also upgrade its main network from ERC20 token to Coin, becoming a fuel on the chain (Gas). This vision seems to have been largely realized to this day, but looking back at the time, when Coin On had only been in operation for six months and its foundation was not yet stable, it was not easy to propose this grand plan and truly put it into practice. As of January 19th, the number of addresses on BinanceChain has reached 934634, completing nearly 200 million transactions, which is faster and cheaper than many blockchains. BNB, as the only fuel, plays its role in every transfer transaction.

Coin Security Smart Chain (BSC) is an Ethereum compatible smart contract blockchain launched by Coin Security in the second quarter of last year. In the words of founder Zhao Changpeng (CZ), "BSC's development has gone through a considerable period of time, but it has encountered the best market opportunity. With the rapid development of DeFi, the congestion and expensive handling fees on Ethereum have become increasingly serious. As a choice to support Solidity smart contracts, BSC seized an important development window during this period and achieved explosive growth beyond expectations, thanks to the popularity of over 60 DeFi projects such as PancakeSwap and Burger. The liquidity lockdown of these ecological projects and the payment of trivial miner fees on BSC further enhance the practical value of BNB. It can be said that the interaction between the Coin Security intelligent chain and ecological projects has achieved a win-win cooperation model.

Coin Security Chain and Coin Security Smart Chain Data (as of December 29, 2020) Source: Coin Security Information Drawing: Cointelegraph Chinese

In addition, financial services such as Coin An Wealth Management, Coin An Mining Pool, and Coin An Liquidity Mining have also enriched the usage scenarios of BNB, adding benefits to coin holders. Compared to simply holding, various activities on the platform can provide BNB users with an annualized return rate of around 6% to 10%.

epilogue

As a unicorn company that has only been established for a few years, Coin An perfectly interprets the term "opportunity and creation", which is also very close to the theme words given by Coin An in 2020. The reason why Coinan has become a top cryptocurrency exchange and one-stop blockchain platform in the industry in a short period of time is due to its ability to quickly understand market changes, dare to be the first, self subvert, and user first spirit. The continuous expansion and empowerment of the BNB ecosystem also gives users reason to believe that it has broader potential for value growth in the future.