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.

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