Editor's Note: This article comes fromTalk about Xia Kanshi (ID: huaxiakiss), Author: Hua Xia, published by Odaily with authorization.
Editor's Note: This article comes from
Talk about Xia Kanshi (ID: huaxiakiss
), Author: Hua Xia, published by Odaily with authorization.
The day before yesterday, Binance suddenly announced the acquisition of JEX, a digital asset derivatives trading platform. The price of the JEX platform currency also rose by more than 200% in an instant.
Coincidentally, as early as August 1, 2018, Binance also announced the acquisition of wallet service provider Trust Wallet. At that time, I made an interpretation of this acquisition on the official account. The core point of view is: such acquisitions will become the norm in the future, and this is an important strategic acquisition to improve the layout of its decentralized entire industrial chain.
Recently, I was chatting with a few old friends in the industry. The general opinion is that the market is currently seriously lacking in liquidity, and the only funds are constantly switching between hot spots. It is difficult to see a general rise, and it is even more difficult to have a long-lasting market. Like an idling car, there is movement, but no power to climb.
From the perspective of ordinary investment, you will find that many targets do have a good increase, but you can see it, but you can’t catch it. After you buy it, you may stand at a staged high point, toss a few pullbacks, and finally Still a loss.
So, in a nutshell: the current market is in a state of "man-made hotspots, ineffective idling".
The idling market is characterized by funds playing a completely leading role. It has nothing to do with the fundamentals of the blockchain project itself. Pull up and ship, the smashing is over, and then change to another target.
However, there is another characteristic of the idling market, that is, ordinary investors can't seize opportunities, but institutions with sufficient bullets are active instead, daring to spend money to buy and buy, and dare to make in-depth plans for the future. Institutions and individuals, it is more appropriate to describe the two worlds of ice and fire.
If we regard institutions and ordinary investors as a combination of "non-cooperative game equilibrium". Then, we can think that when ordinary investors are generally not optimistic and pessimistic, it is the best time for the other party's "institution" to deploy.
Based on this, it is not difficult for us to understand why there are investment institutions announcing the secondary market strategy to increase their holdings of a certain project at the moment; and measures such as the acquisition of JEX.com by Binance Assets. Planning for the future has become an important task for long-term institutions.
Long before Binance acquired Trust Wallet, I wrote an article on March 11, 2018 titled "In the future, the wave of mergers and acquisitions in the currency circle will be inevitable!" " article. It elaborates in detail why mergers and acquisitions will become a very cost-effective deal when the industry develops to a certain stage, especially during the downturn. Moreover, not only equity mergers and acquisitions, but also token-level mergers and acquisitions will become a new industry phenomenon.
Today, looking forward to the future, I would like to make another statement on the phenomenon of mergers and acquisitions in the currency circle. The views may not be correct, and I hope to draw out your unique thinking.
secondary title
Why M&A?
For the acquirer
1. Improve the industrial chain.
Mergers and acquisitions are essentially a business, and what the business pursues is the maximization of benefits and values. As far as the encryption economy is concerned, we know that at present and for a long time to come, "trading-trading" is still the biggest demand in the market, and around the development of "trading-trading" demand, spot is only one aspect, including futures, Contract, debit-loan, 0TC, etc. And other forms of financial management services. This is a complete "new finance" sea.
When the entire encrypted asset investor users reach a large scale, the demand for derivatives transactions will explode rapidly, and at the same time, related loans, loans, insurance, etc. will also be released simultaneously.
From the user's point of view, A, B, and C are all needs, and to meet the all-round needs of users is not only considered from the perspective of profitability of a single sub-project, but also from the perspective of serving the needs of the entire industry of users to enhance user stickiness and brand loyalty.
After a round of bear market baptism, competitors in all links of the industrial chain have begun to take shape, and the declining and lagging ones have let the market wash out the cards. At the same time, after a long period of bear market competition, the temporary leader honed out, at this time, no matter how arrogant the team is, the valuation for themselves will not be ridiculously high.
Take the JEX.com project as an example. It has been launched on January 1, 2018. From the beginning to the present, it has focused on options trading and contract trading of encrypted assets. It has gone through a year and a half of product polishing and user accumulation. . It is now a top player in this field. In the foreseeable future, with the recovery of the market, JEX.com will surely usher in a "successful" development in the field of derivatives trading.
Based on such considerations, for Binance, which has users and sufficient funds, it will of course give priority to the latter between building a team and system from scratch; and directly acquiring a project with users, operating experience and systems .
Moreover, for the acquirer, it has obtained the perfection of its own industrial chain, and before the competition begins, it loses the biggest competitor and becomes its own person, so why not do it.
2. Contain competitors.
In the situation of competition in the whole industry chain, it is impossible for competitors to be strong in every link, nor can they be strong in every detail. At this time, for the sake of competition, it is a very cost-effective business to acquire a team in a field where competitors are stronger, to fight against competitors, and to disperse their firepower in major competitive fields. That is to say, it does not need to consume one's own energy and manpower, and at the same time weakens the opponent, and the only possible payment is funds. And for rich institutions, the problems that money can solve are the best.
3. Get users.
Users, in any industry, may be the object of competition. However, in the field of encrypted assets, it will be more important and thorough. There is zero cost for users to register and use on various platforms, and it is free for users to transfer their assets between platforms, and it is even more open for assets to be widely listed on multiple platforms.
Such industry characteristics have led to the fact that various platforms are actually very nervous about users transferring assets to competitors. Even if you are still an unregistered user, it no longer generates income for itself.
For example, according to official data, the current number of JEX users has reached 700,000, the daily transaction volume exceeds 500 million USDT, and the number of new users exceeds 5,000 per day. If 30% of the 700,000 users have not registered with Binance, then these users can be converted into mutual users through future operations. And these 30% of users will not reduce their derivatives transactions on JEX.com just because they registered on Binance.
Of course, JEX.com’s cooperation with Binance is not entirely due to the number of users. What's more important is that a lot of effort has been devoted to innovation and operation in the creation of derivative trading products. For example, options, as an asymmetric trading right, are different from spot products. While option products have high leverage, they also have the characteristics of no liquidation, limited losses, and unlimited profits. In the past year, the JEX.com team, through its own professional and patient operation, has enabled JEX's options products to account for 80% of the global options trading volume, and has been well received by institutions and individual users.
In addition, in the traditional model of options, JEX is also exploring contract varieties with insurance functions. This is an innovation, an attempt. In the future, innovation around derivatives will remain one of the constant directions.
secondary title
For the acquired party
1. Brand improvement
And this will be a huge brand improvement for JEX.com in terms of activating old users and attracting new users in the future.
2. Quickly acquire incremental users
Whole-owned acquisition is different from general financial investment, basically it is one's own people. At this time, for JEX.com, the spot trading users accumulated by Binance must have potential derivatives trading needs. In the future, users can be imported directly to JEX.com by, for example, opening a first-level entrance for derivatives trading on the Binance main site. Even accounts are shared between each other, and users do not need to register new accounts to achieve smooth migration.
secondary title
What kind of target is more likely to be acquired?
When analyzing the question of "what kind of target is easy to be acquired?"
There are a few points:
1. It has the role of accumulating assets for users.
This point, we can equately understand it as the precipitation of trading users. Users and user assets are the core assets that revolve around the rigid needs of "transactions". With such core assets, there is a basis for valuation.
Which segments have these characteristics? The answer is: derivatives, wallets, borrow-loans, communities, market tools.
2. Can generate cash flow.
In line with this category: derivatives, borrow-loans, market instruments.
The current market demand is "transaction-transaction", so "transaction-transaction" around the service is the biggest demand of users in the market. For example: derivatives, debit-loan, market and other tools.
The answer is yes.
secondary title
Will Binance start a wave of mergers and acquisitions?
The answer is yes.
Moreover, it is not that Binance started the wave of mergers and acquisitions. It is a natural choice after the industry has developed to a certain stage. Re-deconstruct and redefine the market structure to meet the new industry cycle.
Let's go deeper, and it is not impossible to merge and acquire based on the TOKEN level. Those who hold a project token are themselves relatively accurate traders. And many projects have reached historical lows in terms of transaction volume and activity.
Based on the merger and acquisition of project tokens, we assume a phenomenon: a project foundation purchased a large number of A tokens from the team and the secondary market in advance, and then issued an announcement saying that holding B tokens can get an airdrop of A tokens. This is actually a disguised form of acquiring tokens to achieve the purpose of increasing the number of users who own tokens. In the end, it enriches the transaction activity and number of holders of Project A.
