Has BNB's Price Seen a Minor Recovery, but Will Lackluster Network Activity and Subpar Binance Launchpad Results Limit Its Gains?
The native token of the BNB chain experienced a 4.1% increase between October 10th and 11th, demonstrating resilience after briefly testing the $555 support level. Since July, despite a 15.6% decline in the broader altcoin market, BNB's price has remained relatively stable. This performance has solidified BNB's position as the third-largest cryptocurrency, with a market capitalization $15 billion higher than Solana's.
Activity on the BNB chain has been declining, which could pose a threat to BNB's price. Over the past week, on-chain activity on the BNB chain has dropped by 37%, raising investor concerns about the sustainability of BNB's recent excellent performance. Traders are worried that Ethereum's Layer-2 scaling solutions are gaining attention, especially after the Base network launch, which offers rapid and extremely low-cost integration services with Coinbase, the leading U.S. exchange and Web3 wallet provider.
It can be argued that part of BNB's value is driven by Binance Exchange's products, including exclusive Launchpad access and trading fee discounts, which may reduce the demand for using BNB on the BNB chain itself. However, BNB is widely used throughout the ecosystem's decentralized applications (DApps) for transactions, staking, yield farming, real-world assets (RWA), lending, Launchpads, gaming, and derivatives markets, in addition to network transaction fees.
To assess whether activity on the BNB chain indeed supports BNB's price, it is crucial to examine key indicators such as on-chain deposits and network fees.
Currently, the total value locked (TVL) on the BNB chain stands at 8.1 million BNB, which has not changed significantly from two months ago. However, within the week ending October 7th, network fees dropped to their lowest level in over four years. The accumulated fees for that period were 1,880 BNB, a substantial 56% decrease from the previous week.
The decline in fees is primarily due to a 25% reduction in decentralized application (DApp) transaction volumes on the BNB chain, which could pose a potential concern for BNB's price outlook. Underperforming projects include PancakeSwap, with a 25% decrease in weekly transaction volume, and Uniswap, which saw a 22% drop. In comparison, according to DefiLlama data, Ethereum's DApp transaction volumes decreased by 9% during the same period, while Solana's on-chain activity reduced by 15%.
Regarding deposits, Ethereum's total value locked (TVL) is at 19.2 million ETH, unchanged from two months ago. Meanwhile, Solana's network TVL soared to 40.9 million SOL, reaching its highest level in two years, reflecting a 26% increase over the past two months. Essentially, the BNB chain's activity is slightly lagging behind its competitors, which does not support BNB's recent outstanding performance in the broader altcoin market.
How sustainable is Binance Launchpad? One of the factors limiting the rise in BNB's price is the growing criticism surrounding Binance's listing fees. According to Arthur Hayes, co-founder and former CEO of BitMEX, token issuers are reportedly required to purchase and hold approximately $5 million worth of BNB and are expected to give away up to 16% of the token supply.
Ignas, co-founder of Pink Brains DeFi Creator Studio, suggests that the Ethereum Layer-2 project Scroll could have issued its tokens through a decentralized Launchpool and allocated 5.5% of the supply to liquidity incentives. This approach could have boosted ecosystem activity and ultimately prompted major centralized exchanges (CEXs) to voluntarily list the token. Ignas believes that paying for listings on CEXs rarely creates incentives for long-term holding.Amidst these criticisms, other market analysts have also expressed concern over the recent poor performance of token offerings on the Binance platform. In particular, tokens such as Hamster Kombat (HMSTR), Catizen (CATI), and DOGS have experienced significant price drops. According to a user named ZerebusX on platform X, "This is not the Binance we are familiar with, nor the Binance that CZ desires."
Consequently, the outlook for BNB's price is influenced by the sluggish activity on the BNB chain and the overall market sentiment towards Binance's exchange services, including its Launchpad product.