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Binance Coin (BNB) market capitalization exceeds that of Santander Group and UBS

2021 has been an impressive year for Binance Coin (BNB), which has so far appreciated by more than 900%.

One of the main drivers of BNB’s growth was the continued congestion on the Ethereum network. As this fight went on Binance Smart Chain (BSC) emerged as an alternative, meeting the demands of the ever-growing decentralized finance (DeFi) sector.

As BNB reached a market capitalization of $ 64 billion, it has outperformed several traditional banks, including Santander, the Bank of Montreal, and UBS. Meanwhile, some analysts point to the estimated value and impact of Coinbase’s upcoming direct listing (valued at $ 100 billion) as a catalyst behind the BNB price surge.

A common narrative that emerged in recent weeks is that the COIN listing is also adding value to centralized exchange tokens. Analysts also speculate that other US-based regulated exchanges such as Crack y Gemini They will likely go the way of Coinbase and attempt to raise funds through a share offering.

To understand BNB’s potential, one must first understand the differences between stocks. Once this is clarified, it will be possible to analyze the possible drivers of the appreciation of BNB.

BNB does not represent Binance acciones

The BNB token provides its holders with a discount on trading fees, and is necessary for those who wish to participate in Binance Launchpad token sales. As BNB gained liquidity, it also became a base pair for other cryptocurrencies on Binance.

Over time, other uses emerged as Binance Smart Chain gained popularity. For example, BNB can cover network fees and serve as a utility token in the ecosystem, which includes decentralized applications (dApps) and games.

Binance periodically burns (destroys) some of the non-circulating BNB tokens based on the exchange’s overall trade volume. The effectiveness of this strategy waned over time as investors understood that these destroyed tokens never entered the circulating supply.

The Binance Smart Chain network uses a proof-of-stake authority that eliminates the need for miners or expensive transaction fees. The platform maintained its compatibility with Ethereum Virtual Machine (EVM) and has a similar token and smart contract structure.

Many tokenized (or pegged) cryptocurrencies have gained prominence on Binance networks, allowing users to bypass miners’ fees. Another benefit provided by the BEP-20 model of the Binance Smart Chain is the staking and yield farming capabilities across its vast network of decentralized applications, including the PancakeSwap DEX and Venus lending platform.

Rating of the total value locked on DeFi platforms. Source: DeBank

As shown above, Binance Smart Chain has been gaining ground over other DeFi protocols in terms of total locked value. Thus, new use cases for the BNB token emerged to take center stage as yield farming, liquidity pools, and base pairs used the token across the network.

Banks are reliable dividend providers, but DeFi could outperform the system

Equity shareholders are entitled to a portion of the net profits of publicly traded companies. This amount will vary from quarter to quarter, as the board of directors can choose to pay off the debt or add part of that money to reserves. However, banks are notorious cash cows and therefore are often a reliable source of dividends.

Santander (SAN) dividends paid over the last 12 months divided by the current share price show a 3.7% gain, and Banco de Monteral (BMO) shareholders received a similar return. Swiss-based UBS yields fell in 2020, but historically has averaged 5%.

Bank shareholders do indeed have voting rights at shareholders’ meetings, and minority groups could block measures that would hurt them financially. On the other hand, these shareholders are 100% dependent on the bank’s net income and growth.

BNB, on the other hand, could survive without direct influence from Binance. In the future, if the Binance Smart Chain succeeds in obtaining independent developers and validators, its ecosystem could continue to prosper. In theory, if the token loses its dependency as the ecosystem grows, it will become less centralized.

Done right, BNB’s market capitalization could outpace the entire banking system, but before this happens, these decentralized networks and applications must gain adoption and demonstrate that they can address the needs of major investors and banking customers. .

The views and opinions expressed here are solely those of the Author and do not necessarily reflect the views of Cointelegraph. Each investment and commercial movement involves risks, you must do your own research when making a decision.

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