By CCN.com: Binance Coin (BNB) is the best performing crypto asset in the global market with the exception of cryptocurrencies that launched in 2019.
According to OnChainFX, BNB was the only crypto asset to achieve an all-time high this year since 2017 and it is down about 9 percent from its record high.
Binance coin is down only 9 percent from its all-time high. | Source: coinmarketcap.com
In contrast, bitcoin, which has performed relatively well throughout the past year, is down about 73 percent from its all-time high. Most ERC20 tokens in the market are down about 90 to 99 percent against the U.S. dollar.
Why Binance Coin (BNB) Appealed to Crypto Investors
Throughout the past year, especially in recent months, the Binance team has shown promising progress in the development of the Binance Chain mainnet and Binance Decentralized Exchange (DEX).
This month, the Binance Chain mainnet was released and several projects in the likes of Mithril already migrated to Binance Chain from Ethereum.
$MITH, the first ERC20 to Binance Chain token (BEP2) migration complete. Thank you for the support! https://t.co/vMcIDRjQ8Y
— CZ Binance (@cz_binance) April 25, 2019
By the time a swap was done for BNB to migrate from Ethereum to Binance Chain, it was the most valuable ERC20 token on the Ethereum blockchain network with a valuation of over $2 billion.
The high level of developer activity around Binance Chain and the profitability of Binance, which reportedly recorded a $71 million profit in the first quarter of 2019, likely appealed to investors in the crypto market.
When Binance Coin first launched, it gained popularity from the crypto exchange market because it was the first exchange-based coin with the model of buying back the supply of BNB through the profits generated by the exchange.
But, the crucial catalyst of the momentum of BNB was the development around Binance Chain and DEX that many investors perceive could be the future of the market.
As the market matures and fiat on-ramps become less popular as before, DEXes could see an increase in usage considering that the trend of the technology sector is also moving towards pro-privacy in recent months.
JP Vergne, an Ivey Business School professor, said in a study:
Besides, a new cryptocurrency may look more appealing than its older competitors at the time of introduction, but if it is not backed by a solid team of developers who continually improve its underlying software, over time it will be unable to maintain its initial technological advantage.
After all, every blockchain network is a piece of software and a protocol. Hence, high developer activity and a strong community are key for the long-term success of a blockchain-based project.
How Binance Could Sustain Growth
Binance Coin already achieved a new all-time high while the market is suffering from a 16-month bear market and the valuation of the crypto market is down nearly 80 percent from an all-time high.
A further increase in value from the current level of BNB is difficult to expect in the short-term because BNB is up already 287 percent year-to-date and has outperformed every cryptocurrency in the market.
But, if Binance Chain shows signs of evolving into a more decentralized and a distributed network for decentralized exchanges, and the open-source developer community in crypto takes the lead, it could act as a stimulus for the next wave of growth for Binance.
The first phase of BNB was the launch and beginning of the buyback program. The second phase was the launch of Binance Chain and Binance DEX. Similar to Ethereum in 2017, the third phase of Binance Chain is to prove the worth of its valuation and whether it can turn out to be a viable blockchain for DEXes like investors expect.
The DEX market, although it lacks competitors, is still quite tight with protocols like 0x and platforms such as Kyber Network and Airswap fighting for market share.