Introduction
Following Binance’s Q5 BNB burn announcement in October 2018, I analyzed BNB’s price-to-earnings (P/E) ratio. With the Q1 2019 burn plan now released, this article updates the P/E calculation and explores key insights.
Key Findings
BNB Burn Mechanics & Data
Calculating BNB’s P/E requires understanding its burn rules and supply metrics. For a detailed derivation, refer to How to Value BNB (Binance Coin). Below are the summarized results:
| Metric | Q5 2018 | Q6 2019 |
|----------------------|--------------|--------------|
| BNB Burned | 2.2M | 1.6M |
| Estimated Profit* | ¥3.4B | ¥2.8B |
| P/E Ratio | 9.2 | 8.7 |
(Total revenue minus burn value, excluding operational costs)*
Observations
- Profit Decline: Q5–Q6 saw a ~30% drop in burned BNB, reflecting reduced Binance earnings.
- Profit Leader: BNB remains the most profitable blockchain asset, netting ¥3.4B in Q5 alone.
- Market Resilience: From May 2018 to January 2019, BNB fell 57% vs. BTC’s 60% and ETH’s 83%, showcasing stability.
Critical Analysis
Market Efficiency
BNB’s price encapsulates all available information—expectations, demand, and projected earnings.
Bearish Pressures
With declining crypto markets, Binance’s profits may stagnate, necessitating a lower P/E to incentivize holdings.
Competitive Edge
- Profit Clarity: Binance outperforms traditional firms and most blockchain projects (e.g., STEEM’s 70% layoffs).
- Risks: Competition and exchange security threats are primary concerns.
Investor Note
Only 20% of Binance’s profits fuel BNB burns. The remainder benefits the team, not BNB holders directly.
Projections
At a P/E of 8.7 (January 2019), BNB would need 8.7 years to fully burn its supply. An estimated 4.1 years is required to burn 1 billion tokens (the burn cap).
FAQ
Q1: How does Binance’s profit affect BNB?
A: Higher profits increase BNB burns, reducing supply and potentially boosting value.
Q2: Why did BNB’s burn volume drop in Q6?
A: Lower Binance earnings led to fewer tokens burned.
Q3: Is BNB a good hedge during bear markets?
A: Historically, yes. It declined less than BTC and ETH in 2018–2019.
👉 Explore BNB’s latest burn stats
Q4: What’s the long-term outlook for BNB?
A: With a clear burn mechanism and Binance’s dominance, BNB remains a strong contender, though dependent on market conditions.
👉 Read more about crypto valuation