Has Binance really experienced revenue pressure after being regulated by the United States? Since December last year, Binance has significantly accelerated its pace on LaunchPool, which happened to coincide with a $4.3 billion settlement with the US Department of Justice. The market then heard voices saying that Binance “may be short of money.” However, is Binance really facing revenue pressure?
Binance’s platform token BNB broke through $400 this week, rising 63.93% from $244 at the beginning of 2023 and 27.79% from $313 at the beginning of this year, with a market value of $61.763 billion.
Of course, the rise of BNB, ranking third in market capitalization, is accompanied by the “small spring” that the cryptocurrency market has experienced since February 8. In addition, it has also benefited from Binance’s initial starting point. The platform has been actively operating its new asset issuance section, LaunchPool.
Since December 2023, LaunchPool has accelerated its pace of new listings, with the number of listings in the first two months of this year almost half of the total for the entire previous year (11). LaunchPool is valuable because it not only benefits users but also helps lock in BNB and stablecoin outflows.
The fast-paced LaunchPool coincided with the $4.3 billion fine settlement between Binance and the US Department of Justice, which led to voices saying that Binance is defending the basic income of transaction fees from users and that the world’s largest cryptocurrency exchange might be short of money.
Although the 2023 Binance annual report did not disclose revenue data, the disclosed registered user count (170 million) and third-party statistics on trading volume ($16.69 trillion) both saw significant growth, with increases of 70% and 215.5% respectively compared to 2022.
In 2022, Binance disclosed a revenue of $12 billion. Considering the overall upward trend in the market last year, the platform’s revenue in 2023 is likely to exceed the disclosed $20 billion during the cryptocurrency bull market in 2021.
In 2024, a new cryptocurrency bull market is beginning to brew, and financially strong Binance, which will never be short of money, is seizing the opportunity for expansion. However, its goals are changing.
On February 27, BNB reached a new high of $404, with the selling pressure contributing to the previous high of $398. BNB’s current price is less than halfway to its all-time high of $669.3 on November 7, 2021.
The current cryptocurrency market has swept away the bearish trend of 2022. Analysts position it as the beginning of a new bull market. The top gainer in the market is still Bitcoin (BTC), with BNB breaking new highs, and the market value of BTC, which ranks first, surpassing $1.1 trillion and currently exceeding $570,000. It is followed closely by Ethereum (ETH), which reached a high of $3,280.
With a market value of $61.335 billion, BNB ranks third behind BTC (market value of $1.1 trillion) and ETH (market value of $390 billion), showing a unique advantage in the rising market phase.
BNB’s growth is also benefiting from its ecosystem. On BNBChain, the blockchain network where BNB serves as gas, the total value locked (TVL) of cryptocurrencies is $44.91 billion. Among the more than 600 DeFi applications listed on the third-party data website DeFiLlama, 102 DeFi applications have a TVL of more than $1 million. They support the activity on the BNBChain and increase the liquidity of BNB.
Among the top 10 cryptocurrencies, BNBChain’s TVL ranks second only to Ethereum since the second half of last year, according to DeFiLlama data.
In addition, BNB continues to maintain its burn rate on the chain. So far, BNB has been burned 52,457,076.73 BNB in 26 quarters, with 25.96% of BNB already exited the circulation.
Outside the chain, the most exciting action that affects the price of BNB comes from Binance, which used BNB as its platform token. Since the end of last year, the platform has actively maintained LaunchPool, an important usage scenario for BNB within the platform.
Users familiar with LaunchPool know that it is a channel for users to obtain new assets by staking BNB or stablecoins. Users only need to deposit BNB or stablecoins into the open LaunchPool for a limited time to receive the newly distributed Web3 project assets without consuming any other costs.
Since December 2023, LaunchPool has accelerated the pace of monthly “new coin mining” and launched three new assets that month. In January of this year, the pace continued with three new listings, and from February to now, two new listings have been added. It is worth noting that LaunchPool only began listing new assets in April last year and released a total of 11 new assets throughout the year. In the first two months of this year, LaunchPool has completed nearly half of last year’s “missions.”
From the performance in the secondary market, the new assets on LaunchPool have started to “recover” since December last year.
The first two new assets, ACE and NFP, are still in a downward trend, but the third new asset, AI, is still up 32.52% from its closing price on the first day. XAI, a gaming blockchain launched on January 5, had a maximum increase of 165% and still has a 151.66% increase. However, for users who purely obtain new tokens through staking on LaunchPool, it is considered a pure profit.
LaunchPool’s product has brought a win-win situation for users and Binance. Users can receive airdrops for free, and if BNB rises during the same period, users staking BNB can enjoy two sources of income. Meanwhile, Binance retains users and their BNB and stablecoins.
In January and February alone, Binance locked a total of $9 billion in stablecoins and 15.2 million BNB through LaunchPool, with the latter worth approximately $22.8 billion and a total TVL of $31.8 billion. Taking into account the overlap of users participating in new listings each time, the average locked value per LaunchPool participation is approximately $5.56 billion.
According to DeFiLlama data, during the same period, the total asset value on Binance’s chain was between $80 billion and $90 billion. LaunchPool, which locks in at least 6%-7% of assets, will remain on Binance.
This ratio should not be underestimated. It should be noted that Binance lost $2 billion in the week after reaching a settlement agreement with the US Department of Justice for $4.3 billion. The start of LaunchPool’s accelerated pace coincided with that black swan event for Binance.
After the disclosure of the $4.3 billion fine amount, combined with Binance’s actions to retain users and assets, there have been rumors in the market and the Web3 community that Binance is short of money and that retaining users is crucial for maintaining the basic income of transaction fees.
After the settlement, although Binance’s new CEO Richard Teng repeatedly emphasized in public statements that the company’s “financial strength is not affected” and that “there is no debt in the capital structure, expenses are within a reasonable range, and there is still considerable income and profit,” the market still seems to doubt Binance’s ability to cope with future regulations or even fines.
So, does Binance really lack money? In the end, it depends on its profitability, or in other words, its revenue and profit.
Since Binance is not a publicly listed company and its business scope is not limited to trading, it is difficult to obtain accurate revenue data, and it largely depends on the platform’s willingness to disclose such information.
In January of this year, Binance released its “2023 Annual Review” on its blog, but revenue data was not included. However, this does not prevent us from using estimation and comparison to get a glimpse of the profitability of the “world’s largest cryptocurrency exchange.”
Based on Binance’s year-end summary and third-party statistics on annual trading volume, the platform maintained strong growth in 2023. Although the revenue data for this year is “confidential,” data from previous years remains in the memory of the internet.
According to the “Review,” Binance added more than 40 million users in 2023, increasing the total registered user count to 170 million, compared to 128 million in 2022. Third-party statistics show that Binance’s trading volume in 2023 reached $16.69 trillion, a 215.5% increase from $5.29 trillion in 2022.
Although the revenue for 2023 was not disclosed, Binance disclosed revenue of $12 billion in 2022, and during the previous cryptocurrency bull market in 2021, the disclosed revenue was $20 billion. It can be seen that the cryptocurrency bull market is definitely a year of increased revenue for trading platforms.
In 2023, Binance experienced growth in both the number of registered users and trading volume, with the latter nearly tripling. The dual growth of user count and trading volume will lead to an increase in transaction fee income, which is the main source of revenue for cryptocurrency exchanges. A conservative estimate suggests that Binance’s revenue for the past year is at least $20 billion.
As for profit, if we follow Binance’s previous rule of “burning 20% of profits with BNB,” based on the total BNB burned in the four quarters of 2023 (8,233,412.617 BNB) and the median price of BNB in each quarter, Binance’s profit for the whole year is $11.108 billion.
Overall, Binance has maintained rapid growth since its inception, and it still lives up to its title as the “world’s largest cryptocurrency exchange” in terms of market share, user base, and revenue.
It is worth noting that in the face of global observations, interventions, and regulations on cryptocurrencies and emerging finance, Binance seems to be looking for breakthroughs beyond trading services and getting closer to Richard’s core mission when he first took office: promoting compliance and broader freedom in finance.
(Note: Readers are strictly advised to comply with local laws and regulations. This article does not represent any investment advice.)
Do you think BNB will surpass the previous bull market high this year?