30s Summary

BNB token enjoyed a 4.1% increase between October 10-11, making it the third biggest cryptocurrency. However, its on-chain activity dropped by 37% over the past week. Ethereum and its layer-2 scaling solutions are gaining popularity, especially after the Base network launch. BNB’s worth is thought to be based partly on what the Binance exchange offers, including exclusive launchpad access and trading fee markdowns. The token’s future seems uncertain due to criticisms and decreasing activity on the BNB Chain. Furthermore, the launch of Ethereum’s layer-2 Scroll could impact BNB’s market position.

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BNB, which is the homegrown token of BNB Chain, has enjoyed a 4.1% boost between October 10th and 11th. This shows a strong comeback, even after a momentary dip to the $555 level. While many other altcoins took a 15.6% nosedive from July onwards, BNB held its ground. And because it held firm, BNB is now the third biggest cryptocurrency around, roughing up competition like Solana (SOL) by a cool $15 billion in market cap.

But it’s not all rainbows and unicorns for BNB. On-chain activity has dipped by 37% in just the past week, which has got some people worried. This downturn means BNB’s recent success may be short-lived. Plus, Ethereum and its layer-2 scaling solutions are currently rising in popularity, especially after the Base network launch. This network has fast and mega cheap integration with Coinbase, the top US exchange, which may steal BNB’s thunder.

Some believe that BNB’s worth is partly based on what the Binance exchange offers. These goodies include exclusive launchpad access and trading fee markdowns, which might lessen the need for BNB on the BNB Chain. Yet, BNB doesn’t just sit on its laurels – it’s used all over the ecosystem for trading, staking, yield farming, real-world assets (RWA), lending, launchpads, gaming, and derivatives markets.

To check if BNB Chain activity is truly supporting BNB price, we need to look at on-chain deposits and network fees. Right now, BNB Chain’s total value locked (TVL) has barely changed from two months ago, resting at 8.1 million BNB. Network fees, however, have taken a nosedive, tumbling to their lowest level in four years in the week ending Oct. 7. This dive in fees is mainly due to a 25% drop in DApp volumes on BNB Chain, which could spell trouble for BNB price.

Will the Binance Launchpad keep soaring? Binance’s list charges have faced some significant flak. According to Arthur Hayes, co-founder and former CEO of BitMEX, token issuers have to buy and keep around $5 million worth of BNB and give up to 16% of the token supply. Ignas, co-founder of Pink Brains DeFi Creator Studio, thinks Ethereum layer-2 Scroll could have launched its token via a decentralized launchpool, needing only 5.5% of its supply for liquidity incentives. He believes this strategy would’ve bumped ecosystem activity and made major exchanges list the token of their own accord. Ignas also says that paid exchange listings rarely inspire long-lasting holding.

These criticisms, alongside the lackluster performance of recent token launches on Binance, have unsettled some market analysts. Add into the mix a decrease in activity on BNB Chain plus wariness towards Binance’s exchange services, and the future of BNB’s price seems uncertain.

Source: Cointelegraph