Record $ 600M BNB burn suggests Binance made $ 750M in profit in Q1


Binance Coin (BNB) saw its 15th burn to date on April 16. According to data on the chain, Binance burned nearly $ 600 million worth of BNB tokens.

Historically, Binance has burned about 20% of the exchange’s profits. But in the last burn, Binance burned much more than 20%, and the exact percentage of the burn remains uncertain.

BNB’s fundamentals continue to improve

Sam Bankman-Fried, the CEO of FTX, one of the most important cryptocurrency futures exchanges next to Binance, estimated that Binance generated potentially $ 1 billion in revenue in the first quarter of this year.

By contrast, Coinbase’s total profit – which was listed on Nasdaq this week – is estimated to be somewhere between $ 780 million and $ 1.3 billion.

Bankman-Fried, commonly known as SBF, said

So, TL; DR, by a factor of ~ 1.5 or so uncertainty: Binance, Q1 2021: a) $ 1 billion rev, $ 750 million profit -> $ 4 billion rev, $ 3 billion profit run-rate b ) Mixed average rate ~ 0.016% on trades c) They make it very clear that burning is only going to 100 million tokens, but 60% of the rev until then. “

While Binance has burned 20% of the stock’s profits in the past, it is possible that Binance may have burned 70% -80% of its profits in the last burn.

Given this trend, SBF said the $ 600 million burn could add up to about $ 750 million in profits.

He added:

“Based on the original specifications, BNB would burn 20% of the profits. Based on this update, it is now unclear what they will burn, but maybe something like: 80% of the profits (up to 100 million tokens, then nothing more Binance burned $ 600 million in BNB for Q1. That would mean roughly $ 750 million in profit. Assuming $ 1 billion in revenue given their $ 6T in volume in Q1, that implies an average rate of about 0.016 %. “

Since March 27, BNB’s price is up 180% from $ 233 to $ 640.

The rally closed the gap between BNB and Ether (ETH), with BNB now accounting for more than a third of Ethereum’s market cap.

BNB’s strong upward trend was impacted by the strong performance of Binance and its derivatives exchange, as well as the upward trajectory of Binance Smart Chain.

Binance Smart Chain saw a significant increase in daily transaction volume in recent months.

According to BSCScan, the blockchain explorer for Binance Smart Chain, the blockchain network saw the number of daily transactions increase from about 380,000 at the end of January to more than 4.7 million on April 16.

Binance Smart Chain transaction volume. Source: BSCScan

Since BNB is the native token of the Binance Smart Chain and is actively used on platforms such as Pancakeswap as a means of investing in different pools, the demand for BNB has been continuously increasing.

Binance Smart Chain momentum continues

According to Coingecko, BNB has performed best so far with a profit of 710% in the first quarter.

BNB / USDT 1-day price chart (Binance). Source: TradingView.com

Analysts at Coingecko attributed this increase to Binance Smart Chain emerging as an alternative to Ethereum due to the high gas costs on the Ethereum network.

The analysts said

“Ethereum Killer Tokens outperformed $ BTC and $ ETH Airplane Departure $ BNB had the best performance (+ 710% gain), followed by $ ADA (+ 555%) and $ DOT (+ 294%). @Binance Smart Chain #BSC in response to high gas costs on #Ethereum. “