Coin Spotlight
28 Jan 2022

Binance Coin (BNB) in Spotlight

Deepan Datta

If there is any coin that attracts huge attention after bitcoin and Ethereum, it is Binance Coin or BNB. It is a multi-utility coin that has witnessed increased adoption on the back of ever-increasing exchange volume and increased adoption of Binance Smart Chain (BSC) by DeFi projects

The coin has been one of the best performers in the market in the last 12 months period, witnessing a rise from sub ₹2,800 level to an all-time high level of ₹55,813. A growth of over 1800% during the period. 

Binance Coin has set itself apart from other exchange tokens and is one of the most actively developed crypto projects. 

Key Metrics

  • Coin Rank: #4
  • Coin Market Capitalisation (as of 28th Jan 2022): $64.49 billion
  • Coin Market Dominance: 3.84%
  • Coin Economics: Deflationary
  • Coin Initial Total Supply: 200 million BNB
  • Coin Circulating Supply: 165,116,760.89 BNB

Technical Analysis: BNB Token Price Analysis

Binance Coin
source: tradingview.com

BNB has strong support at the $329 (₹25,800) level and is respecting it religiously. From there, BNB has shown multiple signs of a trend reversal, however, it needs to break above the resistive $423 (₹34,000) level, to confirm the trend. A break above could propel further buying at the counter. 

RSI is also moving higher from the oversold position, which is a positive sign for the market, but you need to be cautious as the overall market breadth is still negative. 

In case, if BNB breaks the strong support due to market fluctuations, the next major support is at $258 (₹20,232). 

Disclaimer: Insights and Data mentioned are Time Sensitive. Kindly DYOR to stay safe. 

A Brief Overview of Binance 

Binance is the world’s largest crypto exchange in terms of trading volume and coin listings. It was founded in 2017 by Changpeng Zhao, popularly known as CZ in the crypto circle.

Currently, Binance leads both in crypto spot and derivatives trading volume in the market, with an average daily trading volume of more than $70 billion. 

However, more than its exchange platforms, Binance is popular for other initiatives such as Binance Chain, Binance Smart Chain, and Binance Launchpad, which are aimed to improve the mainstream adoption of cryptos. 

Binance Chain

Soon after the launch of the exchange platform, Binance launched its ERC-20 token, naming it Binance Coin. The token was intended to be used for getting discounts on trading fees and driving the adoption of the Binance exchange platform.

In April 2019, Binance launched its own public blockchain, called Binance Chain, with a primary focus to facilitate decentralised and non-custodial trading and address the limitation of Ethereum blockchain. With the launch of its own mainnet, all of its ERC-20 tokens were replaced by Binance Chain’s native token called BNB. 

Similar to Ethereum, Binance Chain allowed developers to create and run dApps while offering a lower fee on transactions. 

Binance Smart Chain

Binance Smart Chain (BSC) was launched in September 2020 and runs parallel to the Binance Chain. It solves some of the inherent weaknesses of the public blockchain systems and introduces Smart Contract functionality. 

Also, BSC is Ethereum Virtual Machine (EVM) compatible, which allows developers to create and run dApps built on top of the Ethereum blockchain on BSC. 

In the last few months, Binance Smart Chain has become a preferred platform for building DeFi protocols due to high scalability and lower transaction costs. Some of the key crypto projects on BSC include Binance DEX, PancakeSwap, Venus, Spartan Protocol, Bakeryswap. 

The total value locked on BSC has soared to 40 million BNB or $15.59 billion at the current market rate. 

Binance Coin
defillama.com

Binance Launchpad

Binance Launchpad is a crowdfunding platform, where startup crypto projects raise funds from Binance users by offering them their tokens. The tokens are listed on the Binance exchange as a part of Initial Exchange Offering (IEO), where tokens get featured and enjoy exposure to millions of users around the world. 

IEO has become a popular method for crypto projects to raise funds, instead of going for an ICO approach, as projects get access to the huge user-base of Binance. Also, Binance provides complete assistance to projects, both technical and non-technical, to grow within the Binance ecosystem. 

Binance Coin (BNB) Tokenomics

From just being a utility token to receiving a discount on trading fees on Binance exchange, the utility of BNB token has expanded to numerous applications like payment of transaction fee on Binance Smart Chain, for making online digital payments (shopping, bookings, DeFi), etc. 

Using Binance Pay, you can shop using BNB tokens on various online merchant stores, shop gift cards, lottery tickets, etc. 

The initial total supply of BNB tokens was 200 million coins, but with regular burn events, the circulating supply of BNB has reduced a lot, making it a deflationary token. As of 28th Jan 2022, 165,116,760.89 BNB tokens are in circulation. 

The burning of BNB tokens is a quarterly event and runs on a specific formula that is both objective and verifiable. The burning of tokens is based on the price of BNB and BSC on-chain activity. 

Token burning is a mechanism to permanently take out the supply of crypto tokens from the market. 

The number of BNB tokens to be burned is determined using the following formula:

(No. of BSC blocks x 1000)/(Average BNB Price + Constant Price Anchor [1000])

In Dec 2021, Binance burned 1.335 million BNB tokens in the 17th BNB Burn Event. 

Binance’s Future Growth Potential

As the crypto market grows and matures, Binance will be a direct beneficiary due to its leadership position in the market and unique product placement, which benefits a lot of new crypto projects. 

Also, many DeFi, NFT, Metaverse, and Web 3.0 applications are being built on BSC, which will result in increased demand for BNB tokens. And combined with the burning mechanism, BNB will be a scarce asset, resulting in a possible increase in price over time. 

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.

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Deepan Datta

Content Writer

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