The CEX microcosm behind OKB destruction and the investment logic behind platform coins

Bear markets are often the best time to make a move. Investors are looking for and allocating value investment targets. The recent news that OKB has set a new record for destruction value has once again focused the public's attention on platform coins. On September 18, OKX announced that it had repurchased and destroyed more than 6.14 million OKBs in the new quarter, with a value of approximately US$255 million, setting a record for the highest repurchase and destruction amount in history.

Although the overall crypto market is sluggish, exchanges with real profit support still exist independently. With everyone's firm expectation for the subsequent bull market, platform coins are also regarded as one of the crypto sectors with growth potential. The value support of platform coins comes from the platform's trading volume and profits on the one hand, and the repurchase and destruction data can directly reflect the current income status of the platform; on the other hand, it comes from potential growth space, such as whether it can operate safely and stably in the future, how the product iteration leads the Web3 market, and how to continuously obtain new traffic.

This article will take OKB as the entry point to explore the value capture logic of the platform coin track in order to discover more high-quality assets with greater potential?

Find out the real situation of the platform currency track , and the head effect is significant

As one of the core businesses of a crypto exchange, platform coins are an important manifestation of their own value and ecological boundaries. The trend of tokens can more directly reflect the performance of the exchange. Many investors also regard such assets as one of the investment targets with greater value capture capabilities and appreciation potential.

Looking back at the value creation of platform coins, there are two main ways: usage scenarios and repurchase and destruction. Among them, application scenarios and rights will create demand for platform coins, thereby increasing the number of users, and its value will increase accordingly. Repurchase and destruction is similar to share repurchase. In traditional financial markets, this strategy is often used as a powerful tool and conventional weapon to maintain stability or even raise corporate stock prices. Such a strategy also works in the encryption field. Major exchanges will increase the value of platform coins by reducing supply.

Based on this value judgment logic, in order to make it easier for readers to observe, this article selects five platform coins with higher market capitalization as the objects of observation, namely BNB, OKB, BGB, GT and HT, and interprets the platform coins with greater investment value from a data perspective.

Buyback and destruction is a common mechanism to stabilize currency prices. Usually, exchange platforms will use profits, income or handling fees to buy back platform coins from the market. Currently, the buyback and destruction methods, frequency and intensity of each platform coin are different, but they can reflect the performance of the platform at a certain stage.

Among the above mainstream platform coins, except for BGB, which may launch relevant mechanisms in the future, BNB, OKB, GT and HT have all carried out repurchase and destruction this year. Among them, as of September 22, HT has not yet announced the total amount of repurchase and destruction in the third quarter, so there is no relevant data.

As shown in the above figure, according to PANews statistics, these platform coins destroyed a total of about US$2.507 billion in the first three quarters of this year. In terms of the amount of destruction, BNB and OKB are far ahead of other platform coins. Among them, BNB has the largest repurchase and destruction amount, reaching US$1.736 billion, followed by OKB with US$690 million, and HT and GT destroyed tokens worth US$56 million and US$39 million respectively. At the same time, from the trend point of view, the total number of destruction disclosed by BNB and GT showed a downward trend from quarter to quarter, with a decrease of 3.5% and 62.5% in the third quarter compared with the first quarter, respectively, while OKB and HT showed an upward trend, increasing by more than 18.4% and 135.9% respectively. But in terms of quantity, OKB leads by a large margin with a total destruction of 16.822 million pieces, followed by BNB with 6.075 million pieces, and GT and HT followed closely with 8.009 million pieces and 2.778 million pieces respectively. From this data, repurchase and destruction are undoubtedly a direct means to enhance the value of the platform.

It is worth mentioning that Dune data shows that OKB has destroyed more than 70.18 million tokens so far, accounting for nearly 23.4% of the total supply. Among them, since June 2021, the number of OKB destruction has been increasing month by month. Judging from the repurchase data, it has not been affected by the bear market at all.

Although the repurchase and destruction mechanism can stimulate the appreciation of the platform currency value to a certain extent, it is facing a bear market environment. In the past year, the average increase of the above platform currencies reached 58.3%, among which only OKB and BGB showed an upward trend, with increases of 193.4% and 171.9% respectively. BNB and HT both fell by more than 20%, and GT showed a slight downward trend. From the data, OKB and BGB both showed resistance to decline, breaking the current price dilemma of platform currencies.

From the perspective of market value, according to Coingecko data, as of September 22, the market value of these five exchange coins accounted for 83.4% of the market value of exchange coins in CEX (centralized exchanges), of which BNB and OKB contributed nearly four-fifths of the market value, while the rest accounted for only 3.5%. This also means that the "head effect" of the exchange coin track is obvious, and mainstream exchange coins such as BNB and OKB are more recognized and sought after by investors.

The growth of the market value of platform coins is largely inseparable from the ecological empowerment. All platform coins are basically used for transactions and equity certificates, and these scenarios will give them more practical value. For example, OKB can be used for transaction fee discounts, OKX Jumpstart, OKB financial management, etc.

From this point of view, OKB investment has a high cost-effectiveness ratio. This also indirectly confirms that the value of the platform currency is largely derived from the construction of ecological functions and repurchase and destruction.

Explore the development potential of platform coins and capture the "arsenal" of value

How to measure the value of a platform coin, future potential is one of the important factors. The stronger the platform development potential and strategic planning ability, the greater the value-added space given to the platform coin. In order to achieve long-term development in the ever-changing Web3 market, we can find out from OKX's approach.

In the view of PANews, in the arms race of exchanges, OKX has reserved a large number of "arsenals" for future growth, such as products that best meet users' trading needs, product innovation capabilities to tap potential needs, the highest level of asset security and transparency, and brand appreciation under international influence. These business war "weapons" are all protecting OKB's growth.

Optimize trading products, Web3 wallet will become a traffic portal

Let's talk about products first. Although it is an old exchange, OKX is still optimizing its trading products. For example, the powerful high-frequency trading tool launched in August - the reverse position opening function allows users to adjust the position direction in real time with one click when facing a reversal. The strategy copy trading launched in the APP in July reduces user operation costs, captures trading opportunities, and helps order takers get profit sharing.

The product worth mentioning is OKX's Web3 wallet, which has a good reputation among users and is also a unique product among all exchanges. The launch of the Web3 wallet is not only the product of OKX's insight into user needs, but also a strategic deployment for future Web3 traffic. As a non-custodial, decentralized multi-chain wallet, users can efficiently manage their assets and deeply participate in on-chain activities, and travel the on-chain world with a low threshold. The Web3 wallet unifies the three terminals of App, plug-in, and web page, and has supported more than 70 public chains, more than 120 DeFi sector support protocols, more than 30 NFT market aggregation platforms, and supports multiple ecosystems such as Game, Social, MEME, Tool, etc., with a total of more than 300 platforms and protocols supported. The Web3 wallet supports the creation of MPC and AA smart contract wallets, Ordinals market, exchange of Gas, custom network and other rich functions. In the future, thanks to the Web3 wallet, OKX can not only gather native crypto users, but also attract new users who try crypto, and become a portal to access Web3.

Highest levels of security and transparency

Let's talk about security and transparency. This is an indispensable topic in the crypto field and the factor that users care about most. Security incidents are "devastating" to the platform, which is also an eternal topic for exchanges. Recently, OKX announced that it has successfully completed the SOC (Service Organization Control) 2 Type II audit, reaching the highest global standards in terms of governance of service processes, management of sensitive data, and protection of data privacy. This proves OKX's unremitting efforts in ensuring the highest level of security and compliance standards.

In terms of transparency, OKX insists on updating the previously launched proof of reserve (PoR) data every month, and users can also verify whether the exchange has 100% capital reserves and whether the user's principal is backed by 1:1 real assets. At present, OKX has released 10 rounds of proof of reserve, and the latest round shows that the reserve rates of its 22 public currencies are all over 100%.

Strong global brand power

If the above transaction data and product capabilities are all tangible and measurable platform currency standards, another thing that cannot be quantified but can open up more room for future imagination is actually the brand influence accumulated over the years. As early as the 1970s, Nobel Prize winner in economics Herbert Simon pointed out that "in today's era of rapid information development, the value of attention will exceed the information itself."

Among all the exchanges, OKX is the platform that creates the most brand activities. It increases its brand influence in the traditional and Web3 worlds by sponsoring multiple events and competitions. Its partners include Premier League champion Manchester City Football Club, McLaren Formula One, Tribeca Music Festival, and the recent crypto summit "TOKEN2049".

The increase in the platform's global visibility and influence will not only allow the crypto market to break out of its circle, but also help OKX occupy more users' minds, achieve customer conversion and potential transaction volume growth, thereby building an upward "ladder" for the development space of the platform currency.

In other words, while OKX captures more crypto ecological value and user needs from a number of products, it also makes the value of the platform currency increase invisibly, which becomes the basis for it to continue to increase the repurchase and destruction of OKB in the fearless bear market. This strategy of OKX has a demonstrative significance worthy of reference.

In short, platform coins are not only a magnifying glass to measure the value of exchanges, but also a powerful weapon to feed back their own business. But in the final analysis, the purpose of platform coins is to create a closer connection between users and platforms through interest bundling. When exchanges really settle down and walk with users, users and platforms will achieve a two-way rush.