This morning, the crypto industry woke up to the news that Binance is poised to acquire CoinMarketCap. With a price tag of as much as $400m, the deal would be one of the biggest in crypto history.
The question becomes - what’s driving the deal? Why did Binance - already one of the most powerful companies in the crypto world - see the need to bring CMC into the family?
Here are four possible reasons:
CoinMarketCap is one of the oldest and almost certainly the best known crypto data aggregator. Over the last six months, the site saw 207.2 million visitors. Over that same time period, Binance saw 113.8 million. For those keeping track, that means that CoinMarketCap’s traffic is about 80% higher than Binance’s.
Meanwhile, Binance is in a lock-step race with Coinbase for the greatest share of traffic among crypto exchanges, with each of them claiming just a little over 20% share. In this way, the purchase of CoinMarketCap might be a mechanism to drive traffic to Binance and help give it an edge over exchange competitors.
CoinMarketCap was founded by the anonymous "Brandon Chez” in 2013. Binance, meanwhile, was founded in 2017. While newer competitors to CMC like Nomics and Messari’s OnChainFX have advanced features for trying to clean up data (such as excluding exchanges who provide lower quality data or who are suspected of wash trading), CMC has a reputation for having some of the most complete long term data sets. Both this historical data, as well as up-to-date contemporary data about competitors, could be extremely valuable to Binance.
One of the most impressive things about CMC is the fact that they have grown their annual ad revenue to between $25 and $40 million without every taking venture financing. On the one hand, it is unlikely that this ad revenue is the primary driver of the acquisition. On the other hand, this isn’t chump change. It both de-risks the investment as well as creates a powerful base for an advertising revenue line within the group.
Binance is a relatively aggressive acquirer. Over the last two years, the company has acquired at least nine firms according to The Block, although only 5 have been publicly announced. Between these sort of acquisitions, as well as a continuous stream of new exchange and product launches, it’s clear that Binance is trying to send a signal to the market that they are the most dynamic actor in the space.