At 13:43 on April 14th, at the last moment when Coinbase was about to officially land on Nasdaq, a "dramatic" scene happened.
Coinbase’s number one competitor named in the listing document (S-1), Binance, which has made it clear that it will not be listed, officially announced that it will list the Coinbase stock token COIN.
In a trance, people suddenly realized that in terms of breaking through the barriers between traditional capital and cryptocurrencies, the two top exchanges, Coinbase and Binance, seem to have embarked on different paths: the former chose to personally enter the traditional capital market , to provide investors in the traditional securities market with a convenient channel to invest in high-quality companies in the encryption field. The latter chooses a more crypto method, opening up the investment in high-quality assets in the traditional capital market for encrypted investors in the form of equity tokens window.
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01 The next stop, the traditional capital market or the emerging encryption world?
The time node of the fork in the road between Coinbase and Binance Station can be roughly pushed back to the summer and autumn of last year.
In July 2020, Reuters learned from several people familiar with the matter that Coinbase had quietly started preparations for listing. Rumors of its listing preparations.
In September of the same year, when the Ethereum gas remained high and the experience became worse and worse, Binance announced the official launch of the EVM-compatible Binance Smart Chain (BSC) mainnet. Only half a year has passed, and a prosperous ecological scale has been built on BSC. According to DeBank data, the total locked-up volume (TVL) of DeFi on the BSC chain is currently 23.75 billion US dollars, which has reached one-third of the TVL on the Ethereum chain. one.
From the perspective of operating characteristics and business focus, Coinbase and Binance have long been quite different.
Since its inception, Coinbase has been adhering to the traditional and rigorous style of play. It only conducts business in places that have obtained regulatory permission. It does not issue platform tokens, does not make derivatives, and will even take the initiative to remove tokens that are controversial at the regulatory level ( Such as XRP), these near-extreme self-discipline laid a good foundation for him to choose to land in the traditional capital market, and finally won him the first ticket to land on Nasdaq in the track.
The success of Coinbase has also inspired countless latecomers. At the beginning of the year, the Winklevoss brothers, the founders of Gemini, replied in an interview: "We are observing the entire market, and we are also discussing whether it makes sense to list Gemini at this point in time." A listing is being considered sometime next year, possibly in a direct listing similar to Coinbase.
Unlike Coinbase, which focuses on the US market, Binance has plans for both the traditional market and the new world.
Due to Binance's wider global business scope and involvement in more jurisdictions, it had to adopt a non-standardized and more flexible compliance strategy. Specifically, Binance will cooperate with local compliance entities in areas with stricter and clearer regulations, and these partners will launch platforms that fully meet local regulatory requirements for independent operations, such as Binance US, which also specializes in the US market like Coinbase. (Binance.US) has now obtained operating licenses in 37 states, and the possibility of listing will not be ruled out in the future; while in regions with relatively active supervision, Binance’s choice is to use the main website (Binance.com) quickly seized the market, and continuously launched new services such as contracts, options, Staking, and DeFi mining based on user needs.
And BSC is the top priority of Binance's development in the past and for a long time to come. As the founder of a top centralized exchange, Zhao Changpeng himself has repeatedly emphasized that decentralized exchanges (DEX) are the general trend of the future. This may be why Binance did not choose to embrace the traditional capital market like Coinbase, but moved towards Potential reasons for the cryptocurrency world to go deeper.
At present, a large number of projects have emerged in the BSC ecology, and various infrastructures, DeFi and NFT components, etc. have tended to be perfected. In addition to its own ecology continuing to be active, user and lock-up data are catching up with Ethereum. BSC has also led a collective explosion of the exchange public chain.
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02 Compared with core business, can BNB continue to fly?
Ever since Coinbase confirmed its imminent listing, speculation about the exchange's valuation has never ceased. The reference price (not the opening price) given by Nasdaq this morning is set at US$250 per share. Based on this price, the fully diluted Coinbase valuation will reach approximately US$65.3 billion. If calculated according to the target price of US$600 for a single share given by the investment bank Moffett Nathanson, Coinbase's fully diluted valuation will be as high as US$156.7 billion.
As the outside world's valuation speculation about Coinbase has risen, the price and market value of BNB have also continued to rise. Which core business data is better? What is the level of revenue? Is the valuation (token circulation market value) reasonable? Who is overrated or underrated?
Before the comparison, we first need to declare two principles for data acquisition:
Among all the comparison data, only a small part of the data has clear official information sources, so when citing unofficial data, we will give priority to selecting third-party data sources with high reputation (because CoinMarketCap has been acquired by Binance , so the following third-party data sources are preferred to choose CoinGecko), and other third-party data sources cannot provide information, we will calculate and estimate through specific rules, and the specific calculation methods will be explained.
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Comparison Dimension 1: Trading Volume Data
Since Coinbase does not provide derivatives trading services, the trading volume comparison here is limited to spot data.
Last Tuesday, Coinbase officially released the exchange's first quarter 2021Performance Forecast Report, it was mentioned in the report that the total trading volume of Coinbase in the first quarter is expected to be 335 billion US dollars. We tried to use this data to verify the accuracy of CoinGecko data. As can be seen from the figure below, the trading volume of Coinbase in the past 24 hours was about 4.2 billion US dollars. At the level of more than 300 billion US dollars.
Looking at Binance again, in the past 24 hours, the transaction volume of Binance.com alone has reached 50.6 billion US dollars, more than ten times the transaction data of Coinbase.
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Comparison Dimension 2: Revenue Data
Theoretically speaking, the main source of exchange revenue is user transaction fees. Considering that Binance has an overwhelming advantage in spot trading volume and ranks first in the derivatives trading field that Coinbase has not yet touched, its The revenue level should be much higher than Coinbase, so what is the specific situation?
Or throw out the data that Coinbase itself has disclosed. In the S-1 form submitted to the SEC, Coinbase revealed that the exchange’s total revenue in 2020 was US$1.3 billion, net profit was US$320 million, and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were approximately 5.3. One hundred million U.S. dollars.
In the first quarter 2021 performance forecast report released last week, Coinbase predicted that its total revenue in the first quarter would be US$1.8 billion, net profit would be approximately US$730-800 million, and EBITDA would be approximately US$1.1 billion.
Looking at Binance again, in December last year, Changpeng Zhao mentioned in an interview with Bloomberg that Binance’s net profit in 2020 will be approximately US$800-100 million. Compared with Coinbase’s net profit of US$320 million in the same period, it can be seen that Ann does have stronger profitability.
As for the revenue status in the first quarter of 2021, since Binance, as a private company, has no obligation to disclose its operating status, it is difficult to know the specific amount without official disclosure, but we can roughly capture it through the historical destruction of BNB. Some clues.
As of the publication, Binance has not announced the BNB burning situation in the first quarter of 2021, so we choose the average burning quantity of the past four quarters to calculate. According to the official announcement of Binance, the number of BNB burned in the past four quarters was 3,373,988 BNB, 3,477,388 BNB, 2,253,888 BNB, and 3,619,888 BNB, with an average of 3,181,288 BNB.
As for the price of BNB, if the market quotation of 270 USDT on the last day of the first quarter (March 31) is used, the reverse calculation shows that the burning amount of BNB in the first quarter is 859 million US dollars; While the market is rising, a more reasonable way may be to take the median of the quarterly highest price and lowest price of 180 USDT to calculate. In this way, the amount of BNB burned in the first quarter of the reverse calculation is 572 million US dollars.
Then, based on the calculated amount of BNB burnt, we inversely deduce its revenue in the first quarter. One thing needs to be clarified here. In the old version of the BNB white paper, Binance clearly mentioned that it would use 20% of its quarterly profits to repurchase BNB for destruction, but this description has been deleted in the new version of the white paper. However, based on historical experience, the number of BNB burned in the past few quarters is still positively correlated with the transaction volume of the Binance platform. Therefore, the calculation of this step will still be carried out according to the 20% rule of the old version of the white paper. If Binance has a new The undisclosed destruction standard, the calculation error in this step will theoretically be further amplified.
The result of a simple calculation is that if BNB is priced at 270 USDT, Binance’s expected profit in the first quarter of 2021 is $4.295 billion; if BNB is priced at 180 USDT, Binance’s expected profit in the first quarter of 2021 is $2.86 billion .
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Comparison Dimension 3: Valuation (circulation market value)/profit data
Compared with pure transaction volume and revenue data, the specific ratio of valuation (market value in circulation)/profit can more clearly see the market's sentiment towards the stock price (currency price) of the trading platform, and it is also a way to judge whether the two parties are overvalued or An important reference standard underestimated.
Let’s throw out Coinbase’s data first. If the reference price given by Nasdaq is US$250, the fully diluted Coinbase valuation will reach about US$65.3 billion, corresponding to a net profit of US$730-800 million in the first quarter (note It is very profitable in a single quarter), and the valuation/profit ratio is about 81.6 - 89.5. If calculated according to the target price of US$600 for a single share given by the investment bank Moffett Nathanson, Coinbase's fully diluted valuation will be as high as US$156.7 billion, corresponding to a net profit of US$730-800 million in the first quarter (note that it is extremely profitable in a single quarter), The valuation/profit ratio is about 195.8 - 214.6.
Looking at Binance again, with BNB’s recent violent rise, the market value of BNB’s circulation has now reached 90.7 billion US dollars. Referring to the previous link, if the expected first-quarter profit of USD 4.295 billion is taken, Binance’s circulating market value/profit is about 21.1, and if the expected first-quarter profit of USD 2.86 billion is taken, Binance’s circulating market value/profit is about 31.7 .
To sum up, even if the relatively conservative Nasdaq reference price ($250) is used for the single-share quotation of Coinbase, its valuation/profit (81.6 - 89.5) ratio is still much higher than the expected profit for the single quarter. Binance’s circulating market capitalization/profit ratio (31.7) with relatively conservative data.
Considering that Coinbase, as the first cryptocurrency exchange that directly landed in the traditional capital market, will also become the only choice for old money to hold the legal rights and interests of the top exchanges in the currency circle through the secondary securities trading platform in a short period of time, its stock price has certain The premium is not surprising.
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03 Binance that is not listed, where is the end?
Since 2018, Changpeng Zhao has repeatedly stated in public or private interviews that Binance has no IPO plans for the time being.
It is true that the successful listing of Coinbase is a major stage victory in the exchange's own development process, and it will also open up a thorny road for Kraken, Gemini and other latecomers, and it will become a milestone for the entire cryptocurrency world to move towards the mainstream. Big milestone event. But what we are more curious about is, where is the end point of Binance, which is not listed?
At the beginning of this year, Zhao Changpeng gave a further explanation of the reasons for not going public when answering questions from the media. Changpeng Zhao said: "Binance hopes to take a path that is more suitable for the encrypted world and expand the utility of its utility token BNB."
It is not difficult to see that the "path that is more suitable for the encrypted world" pointed out by Changpeng Zhao obviously includes his exploration on BSC, and should also include the equity token trading business that has just started recently and is about to "grab" Coinbase. To a certain extent, this also fits Binance’s positioning for itself—not just an exchange, but an open service platform for the cryptocurrency world. In fact, for a long time, Binance has been continuously expanding its business territory beyond trading, public chains, investment funds, mining pools, wallets, data analysis, payment... Binance's footprints are spreading all over the cryptocurrency world In every corner, it is no wonder that the industry will jokingly call "Binance Universe".
As for the so-called end point, standing at different heights, the distance of the "end point" seen will naturally be different. In contrast, the clearer direction is actually the direction. As we can see now, Binance is following a path that is more in line with its philosophy , follow its vision of "serving everything in the encrypted world" and continue to move forward.
