Senior Analyst | Li Xueting (WeChat ID wawa6668720, welcome to correct and communicate)
Produced by Odaily Research Institute
Produced by Odaily Research Institute
A year ago, the “intruder” FCoin disrupted the digital currency exchange landscape by virtue of “transaction is mining”, and OKEx, Binance, Huobi, etc. have established defensive measures. Looking back a year later, neither the ecological synergy nor the opening of the alliance is satisfactory. On the contrary, platform currency, as one of the few digital currencies with real scenarios and needs, has entered the mainstream with the self-evolution of exchanges.
From a qualitative point of view, the cornerstone of the value of the platform currency is the profitability of the exchange, and behind it is the brand and development of the platform, the transaction volume and depth, the choice of project parties, the supply and demand scenarios of the platform currency, etc.
Regarding the basic logic of the platform currency, Mr. Odaily’s introductory article last year is not out of date. However, with the rise and fall of the IEO model, the opening of new channels on the exchange, and the continuous adjustment of the issuance and destruction mechanism, we still need a quantitative analysis model to feel the deviation between the price and value of the platform currency.
Therefore, this article will compare the similarities and differences in the mechanism and design of the three major platform currencies OKB, BNB, and HT, and then based on historical data and assumptions, establish a valuation system suitable for the current platform currency, and provide other exchanges based on the same business model. Provide lessons and references.
There are many factors that affect short-term currency prices. Lock-up incentives, mining incentives, and currency holding rewards will all lead to short-term imbalances in supply and demand. For example, if the supply of coins is reduced, the demand will increase accordingly, which is reflected in the price of coins that is higher than the reasonable balance.
first level title
The conclusion of the price-earnings ratio calculation method: the prices of the three major platform tokens are all undervalued, and HT has the largest room for growth
The price-earnings method is often used to evaluate whether the price of a stock is reasonable. The formula is, price-earnings ratio P/E = current stock price / net profit per share. For example, if the annual net profit per share of a certain stock is 0.5 yuan, and the current stock price is 10 yuan, then its price-earnings ratio is P/E= 10/0.5=20.
In the blockchain industry, the profitability of digital currency exchanges is relatively strong, and the weight of discourse is high. Therefore, I use the price-earnings ratio of 15 times in a bear market, 20 times in a mild market, and 30 times in a bull market as an assumption, corresponding to the price-earnings ratio of each market under different market environments. The net profit of "shares" (which can be roughly estimated by the trading volume), finally calculates the reasonable price range of "platform stocks" (platform currency).
first level title
The conclusion based on the Fisher equation calculation method: the circulation market value of the three major platform coins has room for growth, and BNB has the largest room for growth
The Fisher equation M * V = P * Q was derived by Milton Friedman (Irving Fisher and. Milton Friedman) in the 20th century based on the "Money Quantity Theory". It represents the national income level, price level, and money supply The quantitative relationship between currencies emphasizes the transaction function of currencies. The application of the Fisher equation in the blockchain is generally considered to be proposed by Vitalik in an "On medium-of-exchange token valuations" blog, and is considered to be a suitable tool for cryptocurrency valuation.
Applying the Fisher equation to the cryptocurrency market:
M, the circulation market value of the token;
V, the turnover rate of tokens;
P, the market price of the token;
Q, the market circulation of tokens.
Knowing the price P, circulation Q, and turnover rate V of each platform currency, the circulation market value of the platform currency can be estimated by M=PQ/V. Then compare the estimated platform currency circulation market value M with the current circulation market value M' to estimate the appreciation space.
According to the valuation results of the above-mentioned Fisher equation, the expected circulating market value of BNB may reach 112.7 billion US dollars, the expected circulating market value of HT may reach 8.5 billion US dollars, and the expected circulating market value of OKB may reach 4.958 billion US dollars. Among them, the circulation market value of BNB has the largest upside, which is about 33 times.
first level title
The conclusion of the discounted cash flow valuation method (Discounted cash flow, DCF): OKB has the greatest room for price appreciation
The value basis of the platform currency is mainly composed of discount value and repurchase value. The discount value comes from the cryptocurrency exchange service fee, and the service fee is based on factors such as transaction volume, service fee rate, and discount rate. The repurchase value comes from the quarterly net profit or income of the cryptocurrency exchange, and the net profit or income needs to be estimated from transaction fee income, new project listing income, exchange labor costs and other expenses.
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The specific formula is:
TV= [ Fn*(1+permanent growth rate)] / (r-permanent growth rate)
Among them, V is the present value of cash flow, t is the period, CFt is the cash flow of period t, r is the average discount rate of all future periods, n is the number of forecast periods (we take n as 5), TV is the future value .
At present, there is no benchmark risk rate in the digital asset market. We refer to the 20-30% annual interest rate generally accepted by start-up companies in the A-round equity financing of venture capital, and assume 20% as the discount rate of the platform currency. The sustainable growth rate generally takes the GDP growth rate of the operating country (here we take 6.2%).
secondary title
OKB Valuation: $28
OKB features:
Fees: Users of different levels can enjoy tiered discounts for holding different amounts of OKB;
Listing: free voting privilege;
Repurchase: For the 300 million OKB currently circulating in the market, 30% of the currency transaction fee will be used to repurchase OKB and destroy it;
IEO snap-up: Hold OKB continuously, and determine the user's pre-order winning coefficient based on the daily average holding amount;
OK Chain public chain fuel.
According to the above chart data, the average daily value of OKB in 2019 is 76 million US dollars. From the perspective of trading volume, OKB has an obvious upward trend.
Before the repurchase and burning mechanism was implemented, OKB adopted the "Happy Friday" activity dividend measure. According to the official announcement of each "Happy Friday" event, the statistics of dividends from April 20, 2018 to March 29, 2019 are as follows.
Since May 4, 2019, OKEx has carried out repurchase and destruction of 300 million OKB currently in circulation in the market. At present, a total of 1,929,043.01 OKB have been destroyed, totaling US$5,574,433.92.
1. OKEx token transaction fee income
Transaction volume: The current valuation starting point is approximately US$1.5 billion per 24 hours.
Annual growth rate: Assume that the growth rate in the next 5 years is 50%, 40%, 30%, 20% and 10% (conservative estimate).
Basic fee rate: Calculated according to the current current transaction rate of 0.1% for both parties.
OKB discount rate (on the premise of deducting OKB mode): OKB holdings >= 500, discount rate 10%; >= 1000, discount rate 20%; >= 1500, discount rate 30%; >= 2000, discount rate 40% %. The combined calculation is 25%. OKB usage rate: Assuming that most rational investors should use OKB for payment, the ratio is 2/3=67%.
From 2019 to 2024, the fee income of OKEx currency trading is 9, 13.67, 19, 24.89, 2.986, and 3.285 billion US dollars.
2. OKB overall value = repurchase value + discount value
The OKB repurchase value is the value generated by repurchasing 30% of OKEx's currency transaction fee income. The overall value of OKB from 2019 to 2024 is 4.57, 6.85, 9.59, 12.47, 1.497, and 1.646 billion U.S. dollars.
Circulation: OKB application scenarios include repurchase and destruction, OKChain public chain, decentralized exchange OKDEx, OK Jumpstart, OKB trading area, free voting privileges, Happy Friday, open exchange win-win plan, global partners, professional Investors, top business privileges, etc. The current circulation S of OKB is 298 million.
3. OKB unit price = OKB overall value / circulation
The present future value V of the overall value of OKB is USD 8.4 billion. OKB unit price may reach 28 US dollars.
Similarly, for the discounted cash flow valuation method, the estimation error exists: as a new thing, the platform currency itself develops rapidly and is greatly affected by the "model", so there will inevitably be large fluctuations in the initial price. It is difficult to predict the cash flow of industries such as telecommunications, which leads to miscalculation.
The three valuation methods introduced above are based on corporate valuation methods, but the characteristics of today’s platform currency are more similar to the early Internet: they are all in the early stages of creativity, innovation, and entrepreneurship. Its ecosystem has not yet taken shape. If it wants to continue to attract participants to buy, cryptocurrency exchanges need to continuously introduce multi-level stimulus measures to enhance the demand and liquidity of platform tokens. Therefore, the platform currency also corresponds to the following risks:
1. Centralization of rules: the exchange has absolute say in the dynamic adjustment of the platform currency rules, and the team is often a large holder of the platform currency, which means that there are exchanges that change the platform currency for their own interests or wrong strategic judgments possible rules.
2. Limited scenarios: Although the repurchase and redemption fees are sufficient to support the current demand for the platform currency, if the currency price rise depends entirely on the platform's business development and dividend capabilities, it will soon enter a bottleneck. The promotion of IEO to the growth of platform currency has been weak, and exchanges still need to further expand the usage scenarios of platform currency.
3. Exchange operating risks: As the issuer of the platform currency, the exchange itself faces risks such as policy supervision, hacker attacks, and team running away. Therefore, when choosing a platform currency, the brand and strength of the exchange also represent the risk of the above risks control.
Similar to analyzing stock financial reports, when using a valuation model to evaluate the value of platform tokens, because we use a part of historical data, there may be a lag in value discovery. Therefore, in the future, we will continue to combine the prospects of the blockchain industry and cryptocurrencies To do more qualitative research and judgment on the specific business of the exchange.
secondary title
BNB Valuation: $70
1. Binance CEX exchange fee income
Transaction volume: The current valuation starting point is approximately US$1.6 billion per 24 hours.
Annual growth rate: Assume that the growth rate in the next 5 years is 50%, 40%, 30%, 20% and 10% (conservative estimate).
Basic fee rate: Calculated according to the current current transaction fee of 0.1%*2 for both parties.
BNB discount rate: Gradually decrease from 50% to 0% within 5 years after issuance (the discount of handling fees will be adjusted every July), and the average annual discount of transaction fees in the next 3 years will be 18.75%=(25%+12.5%)/2, 9.375 %=(12.5%+6.25%)/2 and 6.25%/2=3.125%.
BNB usage rate: Assuming that most of any rational investors use BNB for payment, the ratio is 2/3=67%.
The fee income of CEX exchange from 2019 to 2024 is 10, 16, 24, 32, 3.8, and 4.2 billion US dollars respectively.
2. Binance DEX exchange fee income
Transaction volume: Use the current $3.6 million per 24 hours as a starting point for valuation.
Annual growth rate: Assume that the growth rate in the next 5 years is 50%, 40%, 30%, 20% and 10% (conservative estimate).
Basic fee rate: calculated according to the current 0.04%.
The service fee income of DEX exchanges from 2019 to 2024 is 0.0036, 0.0054, 0.0076, 0.0098, 0.011, and 013 million US dollars respectively.
3. Listing fee income = listing fee for a single project × number of listing projects
Listing unit price: $100,000 listing fee for each project.
Listing fee growth rate: the annual growth rate is calculated at 1%.
Number of coins listed: According to the number of 3 projects launched every week, there are about 150 projects per year (an increase of 100 projects per year).
From 2019 to 2024, Binance's currency listing fee income will be 0.15, 0.25, 0.36, 0.48, 61, and 75 million US dollars.
4. Expenditure = number of personnel * per capita annual salary + other costs
In 2019, the Binance team has about 500 people, and it is assumed that it will increase to 1,000 people in five years.
Per capita annual salary: The annual salary of the team is 60,000 US dollars, and it will increase by 10% every year.
Other costs: It is roughly assumed that other costs are equivalent to 1.5 times of personnel expenses.
Binance's expenditures from 2019 to 2024 are 0.75, 0.99, 1.27, 1.6, 2, and 240 million US dollars.
5. Profit = Total Income - Expenses
Binance's profit from 2019 to 2024 is 9.6, 15.7, 23, 31, 37, 4 billion US dollars.
6. BNB overall value = repurchase value (20% of profit) + discount value
From 2019 to 2024, the overall value of BNB is 3.4, 4.2, 5.1, 6.2, 7.4, and 2.63 billion US dollars.
Circulation: The lock-up volume of BNB application scenarios includes new lock-up, for the purpose of recommenders, for the purpose of transaction fee discounts, verification node lock-up, market allocation lock-up, Binance chain verification node pledge, vertical application lock-up, and investor value lock-up Equal quantity. The current BNB circulation S is 150 million.
7. BNB unit price = BNB overall value / circulation
secondary title
HT Valuation: $41
1. Huobi spot transaction fee income
Transaction volume: The current valuation starting point is approximately US$1.5 billion per 24 hours.
Annual growth rate: Assume that the growth rate in the next 5 years is 50%, 40%, 30%, 20% and 10% (conservative estimate).
Basic fee rate: the basic fee rate for ordinary users is 0.2%, and the basic fee rate for professional users is 0.06%.
HT discount rate: The discount rate for ordinary users is 21.75%, and the basic rate for professional users is 33%.
HT usage rate: Assuming that most of any rational investors should use HT to pay, the ratio is 2/3 = 67%. The utilization rate of ordinary users is 53.6%, and that of professional users is 13.4%.
Huobi spot transaction fee income from 2019 to 2024 is 9.72, 14.58, 20.41, 26.53, 3.184, and 3.502 billion US dollars respectively.
2. Huobi Futures Trading Fee Income
Trading volume: The current 24-hour futures contract trading volume of US$1.5 billion is used as a starting point for valuation.
Annual growth rate: Assume that the growth rates in the next four years are 50%, 40%, 30%, 20% and 10% (conservative estimates).
Basic fee rate: the basic fee rate for ordinary users is 0.025%, and the basic fee rate for professional users is 0.008%.
The fee income of Huobi Futures from 2019 to 2024 will be 2.4, 3.5, 4.97, 650, 770, and 850 million US dollars respectively.
3. Overall value of HT = repurchase value + discount value
The HT repurchase value is the value generated by repurchasing 20% of Huobi’s revenue. The overall value of HT from 2019 to 2024 is 5, 7.8, 11, 14, 1.7, and 1.9 billion US dollars respectively.
Circulation: HT application scenario lock-up volume includes OTC merchant margin lock-up, super partner margin lock-up, Huobi ChiNext project side margin lock-up, Huobi ChiNext project side margin lock-up, ecological fund investment lock-up, investor Protection fund lock-up, etc. The current HT circulation S is 241 million.
4. HT unit price = HT overall value / circulation
The present value V of the overall value of HT is $9.7 billion. HT unit price may reach 41 US dollars.
