Kyle Samani of Multicoin Capital, this week shared an in-depth analysis and valuation of Binance Coin (BNB). In fact, the report was so detailed that Binance CEO Changpeng Zhao described it as “almost scary.” Once he’d had time to properly read it, that is.
Spoiler: Multicoin Capital Is Long On $BNB
The conclusion of the report is that $BNB [coin_price coin=binance-coin] is under-valued, so you can stop reading now and just go buy some…
I mean, duh. CZ was hardly going to tweet praise for the report if it concluded that $BNB wasn’t worth the (virtual) paper it was printed on. But the interesting aspect is his suggestion that the level of detail was “Almost scary”.
I massively under-appreciated how detailed this report went on $BNB and @binance. Almost scary. Definitely worth a read. Also available in 4 languages, Eng, 中文, 한국어, 日本語! Thanks to @SpencerApples @TusharJain_ @KyleSamani @multicoincap 🙏🙏🙏 https://t.co/VPzhUaV403
— CZ Binance (@cz_binance) February 23, 2019
The suggestion here, of course, is that the details were highly accurate. Or alternatively, included things CZ hadn’t thought of but now intends to implement. For a company which, the CEO insists, makes no long-term plans, this could, therefore, give a rare insight into future direction.
Utility Tokens… or Securities?
$BNB tokens current value derives partly from their utility within the Binance ecosystem. They act as staking tokens, discount tokens, and payment tokens, offering several benefits to Binance users who hold them.
Additionally, Binance use 20% of quarterly profits to buy-back and burn $BNB, in a mechanism somewhat analogous to share buyback. Whilst the token is not a typical company share, this could denote it a security, depending on whose definition.
But according to Multicoin Capital, the under-valuation also relates to its potential within Binance Chain, the company’s decentralised exchange platform.
We believe that Binance will be the first for-profit corporation to start out centralized, achieve meaningful scale, and ultimately decentralize itself to become the first internet-sovereign organization, and the largest decentralized autonomous corporation (DAC).
When Binance announced their decentralised exchange, it claimed that “Binance will transition from being a company to a community.”
Multicoin Capital expect this to mean that the value created by Binance DEX, will flow towards $BNB, rather than Binance equity.
Initially, the decentralized exchange will likely eat into the market share of the centralized offering. However, over a time-period of several years, we may see the majority of transactions migrate to the DEX platform.
Due to the nature of exchanges, natural market equilibrium tends towards one dominant player, and Binance are well-placed to fulfil that role. The company’s greatest risk was that a decentralised exchange might rise up and take its prize. With the upcoming launch of Binance Chain, this risk is mitigated.
What do you think of Binance coin (BNB)? Share your thoughts below!
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