On December 26, Binance Coin (BNB), the native token of the BSC Chain, diverged from the broader crypto market trend by surging 11% to reach a six-month high. Despite initial resistance at the $300 mark, BNB’s price rise successfully filled the market cap void left by Solana.
Prior to December 23, BNB was the third-largest cryptocurrency, but Solana’s impressive 50% gain within a week altered the rankings. BNB’s value is largely derived from its low transaction fees and Binance’s exclusive launchpad services. However, BNB faces selling pressure due to significant holdings by Binance’s founders and team.
The lack of transparency in BNB’s initial distribution, especially after changes to Binance’s token burning mechanism over the years, has shaken investor confidence. Binance’s initial commitment to use exchange revenues for buybacks has been replaced by a simpler burning mechanism.
Various valuation models for BNB can be considered, but none accurately reflect how most market participants perceive its benefits and risks. The effective use of decentralized applications on the BNB Smart Chain indicates the demand for BNB, which is closely tied to its usage within the BSC Chain ecosystem.
BSC Chain currently has a Total Value Locked (TVL) of $3.6 billion, which is less than 13% of Ethereum‘s $28.2 billion TVL. It also lags behind Ethereum’s top scaling solutions like Arbitrum, Optimism, Polygon, and Base, which hold a combined TVL of $4.6 billion. BSC Chain’s TVL has increased by 25% over the last 30 days, while Solana and Avalanche have gained 142% and 50%, respectively.
Ethereum and Layer-2 scaling solutions remain unrivaled in volume, accumulating over $46.4 billion in the last 30 days, with Ethereum’s network responsible for 73% of this volume. In contrast, BSC Chain only saw a 6% increase in volume to $4.7 billion. Unique active wallet addresses (UAW) on BSC Chain, Solana, and zkSync Era lead the field, raising questions about the accuracy of these figures. Comparatively, BSC Chain’s 7% increase in addresses interacting with DApps over 30 days is concerning, especially against Ethereum’s 12% increase in the same period.