The Rise of BNB Binance Coin
The price of the BNB token has increased 14 fold in a year, to have a market cap of about $87 billion, as observed by CoinGecko.com. BNB is now ranking third after Bitcoin ($1.1 trillion) and Ether ($252 billion). BNB is the native token for Binance and was designed to be used in the Binance ecosystem.
Well, what are the reasons behind the price appreciation of BNB and mass activity happening on the BSC Binance Smart Chain:
Binance Smart Chain
The success of BSC is the major reason for the price surge of BNB tokens. Well, what is causing the massive activity on BSC?
Pancakeswap is the number one source of major activities on BSC. Its volume increased from $37 million to $1 billion in less than 2 months at the beginning of 2021. It’s the biggest competitor of Uniswap. The big problem with Uniswap is that it’s built on Ethereum, where you need to pay your fees in ether. The fees currently are about $100 per transaction that isn’t reasonable for everyone. Pancakeswap is gaining a lot of popularity, for example, on the ninth of January, the price of one token was less than $1, currently, it’s about $11.56. This caused a lot of users and developers to migrate to pancakeswap from uniswap.
Other projects bringing in more activity on the binance smart chain include venus (involved with decentralized lending and credit system), Bscex, BakerySwap (offering solutions for NFT trading), and Spartan Protocol (lending, derivatives).
For all these projects, fees are paid using BNB tokens, which means all users have to buy BNB tokens. This results in the increased popularity of the token. Binance CEO attributed the recent growth of BNB to the rising trend in the DeFi industry and grabbing some of Ethereum’s market share through BSC.
BNB tokens Burning
Binance recently announced the completion of its 15th quarterly burning of BNB tokens. A total of 1M BNB was burned. Burning completely removes tokens in turn reducing the total supply of tokens. Theoretically, this causes a price surge. This recent burn reduced BNB tokens from 170,532,825 to 169,432,937 BNB.
Binance plans to burn a total of 100M BNB, which is approximately 50% of the total BNB tokens. So far a total of 15.3% has been burned. With more burning, BNB will be scarce and scarcity brings demand which in turn results in a price surge.
Binance Acquiring Other Companies
In the past few days, the BNB price increased by 25%. This gives you an indication of how much profits Binance is making. Binance is reinvesting all these profits back into the crypto industry by acquiring other companies in other fields. Binance is an exchange, but they also acquired, for example, swipe (to get a crypto card) or trust wallet (to have a good software wallet), and CoinMarketCap (the most popular crypto data website in the world).
All these Binance is doing to build their ecosystem and to increase the popularity of and support BNB token. Hence, the mass activity on BSC and price surge of BNB.