Detailed Analysis of Platform Token Valuation Logic: Drivers, and Strategy Analysis for Bull and Bear Markets
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Detailed Analysis of Platform Token Valuation Logic: Drivers, and Strategy Analysis for Bull and Bear Markets
The valuation of a platform token depends on its current value capture capability and growth potential.
Navigating Web3 tides with focused insightsBy 0xLoki
I. The Two-Stage Growth Model of Exchange Tokens
A previous tweet mentioned a major pitfall with exchange tokens: don't blindly trust PE ratios. This stems from the dividend growth model. If we treat buybacks, dividends, new token offering rights, and fee discounts collectively as dividends, then theoretically the valuation of an exchange token should be proportional to its dividend. Under this logic, in 2020 the investment value ranking among the "Big Three" was HT > BNB > OKX.
But clearly, that turned out to be wrong. The reason is simple: relying solely on PE is equivalent to using a single-stage valuation model, while in reality at least a two-stage model should be applied. Future growth rates play a decisive role alongside current income. Of course, the crypto market features distinct bull-bear cycles, making the actual model even more complex. Nevertheless, growth rate plays a decisive role in valuation and value realization.
In short: the valuation of exchange tokens depends on current value capture capability + growth potential.
II. The Real Drivers of Exchange Tokens During Bull Markets
Then comes the next question: what determines growth rate? The answer is assets.
In a previous post, I mentioned that the best time to buy exchange tokens is early in the bull market. Some thought this statement meaningless, but “early bull” doesn’t need to be precise. It’s not about BTC hitting $6,000; more directly speaking, a good buying opportunity for exchange tokens emerges after BTC firmly surpasses its all-time high (ATH).
The logic is straightforward: exchanges profit from trading and asset deposits. A real surge in trading demand usually coincides with explosive asset growth. When BTC rises from $10,000 to $30,000, exchanges don’t earn much because trading remains largely confined to BTC itself. Real volume surges happen during broader asset explosions—ICOs in 2017, DeFi Summer in 2020–2021, GameFi, and new public chains.
With this in mind, BNB’s success becomes unsurprising. Between 2019 and 2020, Binance gained a significant lead in the asset layer competition. Two pillars enabled this: Binance Labs and BSC. Looking back at Binance’s IEOs starting in 2019, you’ll notice these projects weren’t random—they were interconnected and built network effects. A telling sign: I distinctly remember one Binance IEO whose official partners included more than half prior IEO projects. That was just the beginning. During this period, Binance Labs gradually stepped into the spotlight (founded in 2018).
At this point, the gears of fate had already started turning—IEO projects and Binance investments would become some of Binance’s greatest assets in the coming bull market.
Then came DeFi Summer in 2020. Objectively speaking, nearly every exchange missed the first wave of DeFi to varying degrees, but Binance quickly launched BSC. The initial version of BSC essentially absorbed overflow demand from Ethereum. At the time, many employees—and even executives—at competing exchanges didn’t even know how to use a blockchain wallet.
Backed by Binance Labs and BSC, BNB achieved unprecedented success. Its core advantage lay in converting strategic positioning in the asset layer into asset issuance power during the bull market. The logic is simple: if the highest-quality, most wealth-generating assets launch first on Binance or trade primarily on Binance, what choice do traders have? What choice do projects have? Thus, a growth flywheel was created:
More users → stronger wealth effect → higher-quality assets
Other exchanges can be compared here. FTX was relatively successful too, following a similar path: Solana + Alameda/FTX Ventures. Huobi also achieved notable results through this strategy and even showed signs of rivaling—or surpassing—BSC at one point, though unfortunately it ultimately fell short due to various factors. OKX clearly lagged behind during this phase.
As a side note, although there's now controversy around Binance's investments and listings, based on my personal experience, Binance Labs prioritizes long-term value over short-term gains. This shows in their willingness to lead rounds, take larger stakes, and show less sensitivity to valuation—directly opposite to many VCs who chase low valuations, make small follow-on investments, and seek quick unlocks. In fact, Binance Labs often proactively asks project teams to extend vesting periods for investor tokens—including their own.
On the other hand, consider a certain VC linked to an exchange whose founder has been incarcerated (name withheld). You may notice that many of their investment picks underperform, because they enter Pre-Seed rounds with overly lenient terms. I won’t elaborate further—comparisons speak for themselves.
III. Growth Slowdown in Bear Markets and Regulatory Pressure
The second stage of the two-stage dividend growth model eventually reaches a stable state—meaning sustained high growth is impossible. There are many reasons: larger base sizes naturally slow growth, management becomes harder and efficiency declines, and top players face coordinated “dumping” efforts.
An additional point worth noting is the “impossible triangle” for exchanges. Originally proposed in my analysis of on-chain gambling, this framework applies equally well to crypto exchanges given their gray areas. Simply put, exchanges benefit from economies of scale—the larger the scale, the more nonlinearly value capture increases. Choosing compliance + scale inevitably means sacrificing some profits; choosing scale + profits necessarily sacrifices some compliance.
This is precisely Binance’s current challenge. While other exchanges may be less compliant than Binance, they’re smaller and thus attract less regulatory scrutiny. Beyond regulation, we can see Binance is facing growth pressures—rumors of layoffs, copy-trading features, pressuring some projects to bring in market makers—all symptoms of such pressure. That said, these issues won’t fundamentally undermine Binance’s fundamentals. They’re simply inevitable outcomes of massive scale + bear market conditions + prolonged aggressive strategy.
IV. The Offense vs. Defense Strategies
In contrast to Binance’s offensive strategy, OKX exemplifies a “defensive approach.” We can observe that Binance consistently emphasizes user education across investing, listings, and operations—an expression of growth anxiety. Having captured most of the existing market, Binance must attract external traffic to sustain high growth.
OKX, on the other hand, has pursued a different path recently:
(1) Minimal new listings
(2) Heavy investment in asset management: high-yield wealth management subsidies, shark fin products, structured products—all designed to retain existing users and capital
(3) MPC wallets, AA wallets, NFT aggregation markets—bridging CeFi and on-chain worlds—to keep users within OKX’s ecosystem amid the trend toward on-chain decentralization.
In my view, this defensive strategy proved highly successful during the 2022–2023 bear market. OKX gained both users and reputation, which partly explains OKB’s price performance.
V. Back to Square One: Are Exchange Tokens Worth Holding?
If you ask me which exchange tokens I’m most bullish on or which have the strongest fundamentals, I’d say:
(1) BNB
Binance faces intense regulatory and growth pressure, and BNB Chain has underperformed recently. Yet BNB’s fundamentals haven’t fundamentally reversed. Binance still holds a leading position, maintains advantages in the asset layer, possesses the strongest profitability, and offers room for imagination via opBNB and Greenfield.
(2) OKB
OKX was one of the best-performing exchanges during the bear market, especially thanks to its successful defensive strategy. And when the bull market returns, this defense can easily shift into offense—defense doesn’t mean perpetual passivity.
(3) BGB
BGB is one of the few exchanges continuing an offensive strategy throughout the bear market. Additionally, it benefits from cross-ecosystem strengths including the former BitKeep wallet, Foresight News, and Foresight Ventures. (Side note: Foresight Ventures is, in my opinion, one of Asia’s best crypto VCs today.)
However, if you ask whether I’ve bought BNB, OKB, or BGB, I can tell you clearly: I haven’t bought any. At current prices, I likely won’t buy them in the near term either. Three reasons:
(1) Valuations are indeed somewhat high.
(2) Valuation models no longer work. Interestingly, for these three tokens, we don’t actually know the true circulating supply (after deducting founder and platform-held portions). A common belief is that most BNB was repurchased before the last bull run, most OKB was repurchased after the Shanxi incident, and BGB has maintained a high level of centralized control since inception. As such, traditional valuation models are completely ineffective for these tokens.
(3) As mentioned earlier, exchange tokens don’t directly benefit from bear-to-bull transitions, but rather from the asset explosion between early and mid-bull phases. That kind of asset explosion is still far off. The window to enter won’t close immediately.
Here’s a counterintuitive perspective: buying BNB at $200 now isn’t necessarily better than chasing it at $800 during the next bull run—you must consider risk-reward ratio and opportunity cost. What if the bull market lasts much longer? What if Binance runs into trouble or gets overtaken? What about the returns you could earn elsewhere, or the losses avoided by staying in cash?
As for other exchange tokens, honestly, I use or understand them less, but overall I don’t think they’re strong investment candidates at this stage. We’re in the middle of a liquidity crunch—the toughest period for exchanges with weaker profitability. Sometimes surface-level metrics don’t guarantee safety, as seen previously with Dragonex and Fcoin. Sacrificing some potential gains to protect principal isn’t a bad trade-off.
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0xLoki
