On February 27, the price of BNB, the BNBChain Gas token, exceeded US$400, up 63.93% from US$244 at the beginning of 2023, and up 27.79% from US$313 at the beginning of this year, with a market value of US$61.763 billion.
Of course, the rise of BNB, which ranks third in market value, is accompanied by the "small spring" in the crypto asset market since February 8. In addition, it is also due to Binance, the original starting point of BNB, which has recently been actively operating and maintaining its new asset issuance section LaunchPool.
Since December 2023, LaunchPool has accelerated the pace of new product launches. The number of new products launched in the first two months of this year is almost half of the total number of products launched last year (11). The value of LaunchPool lies in that it not only provides benefits to users, but also helps to lock in the outflow of BNB and stablecoins.
LaunchPool’s fast-paced new listing happened just after Binance settled a $4.3 billion fine with the U.S. Department of Justice. A voice immediately emerged: Binance is defending its basic base of user fee income, and the world’s largest cryptocurrency trading platform may be short of money.
Is Binance really facing revenue pressure after being subject to US regulation?
Although revenue data was not disclosed in Binance's 2023 annual report, the number of registered users (170 million) and transaction volume (US$16.69 trillion) reported by third parties have both increased significantly compared to 2022, with increases of 70% and 215.5% respectively.
Binance disclosed revenue of US$12 billion in 2022. Considering the overall upward trend of the market last year, the trading platform's revenue in 2023 is likely to exceed the US$20 billion disclosed during the 2021 crypto bull market.
In 2024, a new crypto bull market began to brew. Binance, which was by no means short of money on its books, once again caught up with the new opportunity, but its goal was changing.
LaunchPool frequently launches new shares, with an average of 15.2 million BNB locked in each transaction
On February 27, BNB soared to $404, setting a new high since November 8, 2022. The $398 at that time was contributed by selling, and now it is strong buying. This price is less than halfway to BNB's historical high of $669.3 on November 7, 2021.
Today's crypto asset market has swept away the bear market in 2022, and analysts have positioned it as the early stage of a new bull market. The leader of the market is still Bitcoin (BTC). When BNB broke a new high, BTC, the largest in market value, soared to US$54,910 and has now broken through US$57,000. Closely following is Ethereum (ETH), which has risen to a high of US$3,280.
BNB, with a market value of $61.335 billion, follows BTC (market value of $1.1 trillion) and ETH (market value of $390 billion). Ranked third, BNB obviously has a unique leading advantage in the market's upward phase.
BNB's growth also benefits from the ecosystem surrounding it.
On BNBChain, a blockchain network where BNB runs as Gas, the total locked value (TVL) of crypto assets is US$4.491 billion. There are more than 600 DeFi applications listed in the third-party data website DeFiLlama, of which 102 DeFi applications have a TVL of more than one million US dollars. They support the activity on the BNBChain chain and also increase the on-chain flow of BNB.
Among the four Layer 1 chains ranked in the top 10 by market capitalization, the TVL of BNBChain (formerly known as BSC) has also resumed growth since the second half of last year, and its data is second only to the originator Ethereum.
BNBChain TVL resumes growth
In addition, BNB continues to maintain the amount of on-chain destruction. So far, a total of 52,457,076.73 BNBs have been destroyed in 26 quarters, and 25.96% of BNB has withdrawn from the circulation market.
Outside the blockchain, the most stimulating action on BNB price came from Binance, which used it as a platform currency. Since the end of last year, the platform has adopted an active operation and maintenance strategy for LaunchPool, an important usage scenario of BNB on the site.
Users familiar with LaunchPool know that this is a channel to obtain new assets by staking BNB or US dollar stablecoins. Users do not need to incur any other costs. As long as they deposit BNB and stablecoins into the LaunchPool that is open for new issuance, they can obtain the new Web3 project assets it distributes within a limited time.
Starting from December 2023, LaunchPool has accelerated the pace of "new coin mining" every month, launching 3 new assets that month. In January this year, the pace continued, launching 3 new assets; from February to now, 2 new assets have been launched. You should know that last year's LaunchPool only started to launch new assets in April, and only released 11 new assets throughout the year, while in the first two months of this year, LaunchPool has completed nearly half of last year's "tasks".
New assets launched by LaunchPool at the end of last year and the beginning of this year
Judging from the performance of the secondary market, new assets on LaunchPool also began to "reverse the decline" in December last year.
In December, the first two new assets, ACE and NFP, have been in a state of decline, but the third new asset AI is still up 32.52% from the closing price on the first day. The game blockchain XAI, which was launched on January 5, has the highest increase of 165%, and it still has an increase of 151.66% so far. However, for users who purely obtain new tokens through LaunchPool staking, it is a "pure profit".
The LaunchPool product brings a win-win situation to users and Binance - users get airdrops for free, and if BNB rises during the same period, users who stake BNB can get two benefits; and Binance retains users and their BNB and US dollar stablecoins.
In January and February this year alone, Binance locked up a total of $9 billion in stablecoins and 15.2 million BNB through LaunchPool, with the latter worth approximately $22.8 billion, for a total locked-up value of $31.8 billion. Taking into account the overlap of users participating in each new offering, the average locked-up value of each new offering on LaunchPool is approximately $5.56 billion.
DeFiLlama data shows that during the same period, the total asset value of Binance chain was between 80 billion and 90 billion US dollars. Once LaunchPool is opened, at least 6%-7% of the assets will remain on Binance.
Don’t underestimate this ratio. You should know that one week after Binance reached a settlement agreement with the US Department of Justice on November 23 last year, the platform lost $2 billion. The starting point for LaunchPool to accelerate the pace of new listings happened to be the month after Binance’s black swan incident.
After the disclosure of the fine of up to US$4.3 billion, combined with Binance's actions to retain users and assets, a voice began to circulate in the market and even in the Web3 circle: Binance is short of money, and retaining users is its way of maintaining its basic base of transaction fee income.
After the settlement, although Binance’s new CEO Richard Teng repeatedly emphasized in public speeches that the company’s “financial strength is not affected” and that “there is no debt in the capital structure, expenditures are within a reasonable range, and there are still considerable revenues and profits”, the market still seems to doubt Binance’s ability to withstand the pressure of subsequent regulation and even fines.
So, does Binance need money? Ultimately, it depends on its ability to make money, or in other words, revenue and profit.
How much money did Binance make last year?
Given that Binance is not a listed company and its business scope is not limited to trading, it is difficult to obtain accurate data on its revenue, which largely depends on its willingness to disclose. In January this year, Binance blog released the "2023 Annual Review", and revenue data was not listed. But this does not prevent us from using measurement and comparison methods to get a glimpse of the profitability of this "world's largest crypto asset trading platform."
Based on Binance's own year-end summary and annual trading volume in third-party statistics, the platform still maintained strong growth in 2023. Although this year's revenue data is "confidential", the data of previous years remains in the memory of the Internet.
Binance disclosed 2023 data
According to the Review, Binance added more than 40 million users in 2023, increasing the number of registered users to 170 million, compared to 128 million in 2022. According to third-party statistics, Binance's trading volume in 2023 reached 16.69 trillion US dollars, an increase of 215.5% from 5.29 trillion US dollars in 2022.
Although the revenue for 2023 has not been disclosed, Binance disclosed revenue of $12 billion in 2022, and in 2021, when the last bull market of crypto assets occurred, Binance disclosed revenue of $20 billion. This shows that the crypto bull market is an absolute year of revenue growth for trading platforms.
Available Binance revenue, user and transaction volume data over the years
In 2023, Binance's registered users and annual trading volume are growing, and the latter has almost tripled. The double growth in users and trading volume will lead to an increase in transaction fee income, which is the main source of revenue for crypto asset trading platforms. According to conservative estimates, Binance's revenue last year was no less than $20 billion.
As for profits, if Binance follows its previous rule of "destroying BNB at 20% of profits", based on the total amount of BNB destroyed in the four quarters of 2023 of 8233412.617 and the median price of BNB in each quarter, Binance's profit for the whole of 2023 will be US$11.108 billion.
The amount of BNB destroyed in the four quarters of last year
Overall, Binance has maintained rapid growth since its establishment. Whether in terms of market share, user base or revenue, the platform still deserves the title of "the world's largest cryptocurrency trading platform."
It is worth noting that under the growth trend, Binance began to expand its boundaries. In addition to the 2023 "Review", the company wrote a blog post to disclose Binance Pay's performance in the payment field.
Binance Pay is a crypto asset payment method launched in 2021. After three years of development and iteration, the total transaction volume of this product has reached 120 billion US dollars. In comparison, this figure is equivalent to 0.4% of the scale of China's third-party payment transactions in 2023 (28.33 trillion US dollars).
The proportion is not large, but the growth rate of each indicator is obvious. In 2023, Binance Pay added thousands of merchants, the number of active users increased by 70% to 12 million, and the total transaction volume reached 77 billion US dollars. This means that in the past year, the average user completed $6,410 in transactions using this payment method, mainly in the payment, gifting, sending or receiving crypto assets.
Richard Teng, CEO of Binance, believes that crypto assets and Binance Pay will bring convenient experience to people in underdeveloped countries and regions where payment is inconvenient. "Now, they can use crypto assets to pay, transfer and remit money within 24/7 hours, and the cost is only a fraction of traditional finance."
Faced with the observation, intervention and regulation of crypto assets and emerging finance by countries around the world, Binance seems to be looking for new breakthroughs beyond trading services, and is getting closer and closer to the core mission that Richard outlined when he first took office: to promote financial compliance and greater freedom.
(Disclaimer: Please strictly abide by the laws and regulations of your location. This article does not represent any investment advice)
