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Binance (BNB) Initital Review

An independent review of Binance (BNB)

Picolo Research

Sep 11, 2018

Binance paves the way for further upside led by increasing market share and user adoption

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Summary

Binance started in Jul 2017 and is an exchange platform for crypto to crypto transactions. It is one of the largest exchanges by trading volume, serving over 350 token pairs for trading.

Company overview

Binance was initially incorporated in China but has recently shifted their headquarters to Malta in favour of its crypto friendliness. The exchange boasts a matching engine that can perform 1.4m transactions per second (TPS) and is known for its high liquidity. Behind the platform is a professional team of 400+ employees with an influential CEO Zhao Changpeng at its helm.

Binance is primarily an altcoin focused exchange, differentiating itself from Coinbase, Bitmex and Bitforex. The platform averages $1b trading volume per day, has over 9m userbase worldwide, and recently surpass Deutsche bank profits in Q1. The platform also announced a $1b social impact fund to foster the growth of blockchain industry and is continually innovating together with its community.

Thematic Views

Higher adoption through organic growth and reputation. Binance has gained a significant foothold in the digital asset exchange sector since its inception. It has continuously retained the top 3 positions as an exchange with the most traded volume globally with an average of $1b per day. The platform has developed itself as one of the major players in the crypto to crypto exchange sector and has built a strong brand name in both the demand and supply side, naming it as one of the most sought-after exchanges for listing. The exchange also dictates one of the best referral programs in the market (40% max commission), as compared to Huobi (30%), OKEx (Adhoc referral program), and Bibox (20%). Binance’s reputation coupled with the steady organic growth of users could translate into sustainable long-term success.

Binance gaining an increased market share of overall trading volume.

Even though total market cap and trading volume has dropped significantly (-70% YTD), Binance trading volume has been consistent around the $1b mark. Its market share of trading volume for both BTC and ETH has increased from 2.4% to 6.9% and 2.9% to 6.1% respectively since Jan 2018. We see a continuation of this trend going forward as we expect Binance to capture 10- 15% of the market’s trading volume.

Innovative drive to improve exchange features and product offerings. Binance has consistently been at the forefront of providing better user experience of their services. In Aug 2018, the exchange revealed an MVP of its decentralised exchange (DEX) platform, which is a core component of their business strategy to provide a hybrid exchange ecosystem. In addition, the firm made its first acquisition in Trust Wallet to support its DEX platform. There are several other features that Binance had rolled out within the past year, which includes Binance Labs, Binance Info and Binance Academy.

Competitor Analysis

There are many competitors in the exchange sector. We have identified two projects that portray significant similarities to Binance for its competitive landscape.