Fundamental Analysis: BBOD (BBD)


BBOD establishes a new industry standard for cryptocurrency futures traders by providing high-speed leverage altcoin trading, stablecoin deposits, and non-custodial client accounts.

Company overview

Key Metrics
Ticker BBD
Target Price N/A
Total Supply 117,382,569
PlatformEthereum, ERC-20
Token Type Utility
Utility typeTrading fee discount
Website https://bbod.io/

Blockchain Board of Derivatives (BBOD) is a semi-decentralized cryptocurrency futures trading platform that provides a real-time, ultra-fast matching engine in conjunction with decentralised, secure blockchain based settlement.

BBOD accepts deposits in the stable coin TrueUSD (TUSD) and offers futures trading on multiple cryptocurrencies against TUSD, enabling one to make profits from both rising and falling cryptocurrency prices.

BBOD’s hybrid architecture offers the user experience of a centralised trading platform whilst providing the security and privacy of a decentralised exchange.

The trading platform boasts a matching engine that can perform 1.25mln messages/sec and is known for its high capacity and low latency.

Behind the platform is a professional team of 35+ employees residing in Cambridge, Barcelona, Seoul, São Paulo, Manilla, Ho Chi Minh City and Mumbai.

BBOD is primarily an altcoin margin trading platform, differentiating itself from Bitmex, Deribit, Huobi DM, and Okex. The platform aims to average $100m trading volume per day by the end of 2020.

BBOD launched beta version in August 2019.


BBD Token overview

BBD is an ERC-20 token issued on the Ethereum blockchain.

The BBD contract address is: 0xb79fc5505ea4f3b920ee7e3349de064226692717

Total Supply: 117,382,569 BBD

Max. Supply: 275,803,582 BBD

Please note that, Max. Supply is higher than Total Supply because BBOD performed a ‘token migration’ in 2018. BBD token-holders migrated the tokens from the old contract address to the current contact address. As a result, BBD token-holders received additional BBD tokens. The split ratio was 100-for-1.

The old contract address: 0x5ca71ea65acb6293e71e62c41b720698b0aa611c

*Definition of Total and Max. Supply: https://coinmarketcap.com/faq/


Utility of BBD token

BBD is the native utility token that functions within the BBOD ecosystem and has several core use cases, including:

TRADING FEES
Trading fees are paid in BBD. This means that a trader needs to buy BBD tokens to execute transaction at BBOD. The more transactions have been executed the more demand for BBD tokens. 

CASHBACK
Users will receive back a percentage of fees paid by them according to daily trading volume and BBD balance. This mechanism should increase demand for BBD token and most importantly stabilises the price of BBD token.


BBOD vs. Competitors

BBOD is classified as a semi-decentralised cryptocurrency futures trading platform. Currently, there are a few other futures trading platforms on the market, however, all of them are fully centralised.

BBOD is the only leveraged trading platform that offers non-custodial accounts for traders.

We have identified four other projects that portray significant similarities to BBOD with regards to their trading products offering.

Table 4. Main competitors

HUOBIOKEX BBODBITMEX BITFINEX
Traditional futures
Perpetual futures
Long/short altcoins
Non-custodial accounts
On-chain settlement
Proof-of-solvency
Number of data feeds for index calculations4594N/A
Base levarage20x20x50x100x3.3x
Number of underlying assets 48168+100
Collateral for margin tradingMultiplesMultiplesTUSDBTCMultiples

Competitive advantages

SAFETY
The world’s first margin trading platform that introduces non-custodial accounts. The platform does not hold either the clients’ digital assets or their private keys.

LEVERAGED ALTCOINS TRADING
There is no other place to trade such a large variety of smaller altcoins with up to 50x leverage. This allows one to find profitable shorting opportunities.

TRANSPARENCY
All balances of the clients’ smart contract accounts are visible on the blockchain (e.g. via Etherscan.io website). In comparison, traders’ deposits at centralised exchanges are located in one or several large wallets controlled by the owners of the exchange.

PROOF OF SOLVENCY
Due to the full transparency of our clients’ funds, BBOD proves solvency (assets = liabilities) every day, once the daily settlement on the blockchain has been performed. It is not clear if our competitors have sufficient funds to satisfy all of their clients’ withdrawal requests.

ADVANCED INDICES DESIGN
Our robust, efficient and intelligently responsive algorithm combines data feeds from 9 spot exchanges. The component spot prices are dynamically weighted according to the current market conditions.

FAIR LIQUIDATION RULES
Any remaining funds from liquidation stay in a clients’ account. Some competitors take all the remaining equity after liquidation.


Roadmap

BBOD is very conservative in terms of announcing future project developments. However, BBOD aims to add many key features to the platform moving forward:

Product Roadmap

Q4/2019: Crypto Market Index Futures (10 most liquid cryptocurrencies)
Q1/2020: Crypto Sector Index Futures (AI, Exchanges, Gambling)
Q1/2020: Crypto Protocol Index Futures (POW, POS, dPOW)
Q1/2020: New asset classes (commodities, stocks, forex, treasuries)
Q2/2020: New deposit/collateral currencies: BTC, ETH and other stable coins pegged to USD and JPY, KRW, EUR, GBP
Q4/2020: Vanilla Options on Futures

Platform Roadmap

Q1/2020: Customisable trading competitions
Q1/2020: Enhanced Historical Market Data
Q2/2020: Enhanced Reporting
Q3/2020: Historical Data Playback
Q4/2020: Copy (social) trading 
Q1/2021: Managed trading accounts
Q2/2021: Build, test, optimise & run live your trading strategy


Valuation

The most popular approaches to assessing the value of a token are the Discounted Cash Flow model (DCF) and Relative (multiple) Valuation model. Due to the lack of historical data related to the traded volume on BBOD, DCF is not an applicable model to assess the value of BBD tokens.

Thus, the Relative Valuation Approach using a dataset of comparable exchanges was adopted to derive a Market Value/Volume multiples (MV/Vol) for all selected exchanges to estimate a possible price range of the BBD token.

The MV/Vol ratio measures the dollar value of the traded volume relative to the total token market value (Market Value). This is a simple way to compare how the market prices one unit of traded volume across exchanges.

We sampled a set of 12 exchanges. The main factor was the Market Value of their tokens. We excluded some exchanges which may not report genuine trading volume.

First, we calculate the Average Daily Volume (Avg. Daily Volume) for each exchange as:

Avg. Daily Volume = 30-day Volume / 30

The MV/Vol ratio for each exchange is computed as follows:

MV/Vol = Market Value / Avg. Daily Volume 

In order to compute the ratios, we selected comparable exchange tokens and collected the required data from https://coinmarketcap.com as of 10/02/2019.

Table 5. Overview of comparable exchange tokens

CoinSymbolPriceTotal SupplyMkt CapType
BinanceBNB$9.150189,175,490$1,730,955,734Centralised
OkexOKB$0.6331,000,000,000$633,299,000Centralised
Huobi
HT$1.010500,000,000$505,000,000Centralised
EthfinexNEC$0.1211,007,949,847$121,984,106Decentralised
CoinbitDEX$0.0531,877,411,130$99,131,062Centralised
KucoinKCS$0.375179,939,916$67,531,450Centralised
BiboxBIX$0.129264,480,791$34,158,488Centralised
Kyber NetworkKNC$0.141215,232,645$30,451,760Decentralised
LatokenLA$0.062400,000,000$24,886,800Centralised
CossCOSS$0.065200,000,000$12,945,600Centralised
Crypto BridgeBCO$0.37027,000,000$9,990,000Decentralised
CobinHoodCOB$0.0091,000,000,000$9,360,000Centralised

After calculating the MV/Vol for each of the selected exchanges, we assigned weights to each exchange.

Weight = Market Value / Sum of Market Value for each exchange

Finally, we computed the Weighted Average Market Value/Volume multiple (WA MV/Vol). (Table 6)

WA MV/Vol = Sum of (Weight * MV/Vol) for each exchange

The valuation is highly sensitive to the weighting methodology. Due to the fact, that trading volume on many exchanges is often higher than in reality. Thus, we decided to assign the weights based on the Market Value of the tokens. We believe that the MV/Vol ratios of the tokens with the highest Market Value are more stable and more efficiently valued by market participants.

Interestingly, the decentralised exchanges offer higher multiples which may be a sign of a premium for proof-of-solvency and real volume calculation.

Table 6. MV/Vol Valuation

CoinMkt Cap30-day VolumeAvg. Daily VolumeMV/VolWeight
Binance$1,730,955,734$16,398,429,527$546,614,3183.252.8%
Okex$633,299,000$12,751,427,596$425,047,5871.519.3%
Huobi
$505,000,000$8,756,094,701$291,869,8231.715.4%
Ethfinex$121,984,106$46,542,806$1,551,42778.63.7%
Coinbit$99,131,062$1,641,185,589$54,706,1861.83.0%
Kucoin$67,531,450$138,418,538$4,613,95114.62.1%
Bibox$34,158,488$8,809,972,787$293,665,7600.11.0%
Kyber Network$30,451,760$5,350,486$178,350170.70.9%
Latoken$24,886,800$4,032,024,713$134,400,8240.20.8%
Coss$12,945,600$146,323,139$4,877,4382.70.4%
Crypto Bridge$9,990,000$13,774,782$459,15921.80.3%
CobinHood$9,360,000$35,531,872$1,184,3967.90.3%

Weighted Average Market Value/Avg.Volume multiple = 7.19

BBOD is planning to be launched in the coming weeks, thus we cannot assign an actual volume to the calculated multiple. The only way to assess the price of the BBD token is to present the hypothetical range of volume we can expect based on the average volume from similar exchanges.

We calculated the Avg. Daily Traded Volume of all relevant margin trading platforms. (Table 7)

Table 7. Main competitors and their Avg. Daily Notional Traded Volume

NameAvg. Daily Volume
Bitmex$800,000,000
Huobi DM$400,000,000
Okex Futures$300,000,000
Bitfinex$140,000,000
Deribit$50,000,000
Predicted BBD Price = (WA MV/Vol * Avg. Daily Volume) / Total Supply

Table 8. Estimated BBD token valuation based on Avg. Daily Volume

Avg. Daily VolumeProjected BBD PriceTotal SupplyMarket Value
$20,000,000
$1.23117,382,569$143,396,338
$50,000,000$3.06117,382,569$358,490,846
$100,000,000$6.13117,382,569$716,981,692
$200,000,000$12.26117,382,569$1,433,963,385
Final valuation : $1.23 – $12.26 per 1 BBD Token

Our estimation of 12-month EFV* for the BBOD tokens is in the range of $1.23 – $12.26 per BBD token depending on the traded volume. (Table 8)

*Estimated Fair Value

Please note, that the above valuation is based on the Total Supply of the BBD token. If Max. Supply is taken into consideration, our estimation of 12-month EFV for BBOD tokens should be multiplied by 0.426 (the ratio of Total Supply/Max. Supply) However, we cannot be certain that the remaining tokens are migrated (users might have lost their private keys or simply do not want to migrate their token in the near future).


Conclusion

We believe that due to the unique features of the platform, such as high-speed leveraged altcoin trading, stablecoin deposits and non-custodial client accounts, BBOD will start to capture a substantial share in the market segment of leveraged trading platforms

Overall, for the reasons listed below, BBOD Research affirms its view that:

  • In comparison to many other exchanges, BBOD collects all trading fees only in BBD tokens which could create instant and substantial demand for BBD.
  • Tokens of decentralised exchanges (Bitshares, Ethfinex, Crypto Bridge) are priced more favourably by the market with the average MV/Vol ratio = 366.2.
  • The combination of decentralised features with the addition of the highly leveraged altcoin futures contracts offering may induce an additional premium by market participants.
  • The BBD token price shall be resilient to short and mid-term fluctuation in the cryptocurrency market (as traders may go long or short) and should offer decent risk diversification for heavily skewed BTC/ETH/EOS portfolios given its lower correlation among the major coins.
  • The expected inflow of institutional money (hedge funds, family offices) shall result in high demand for USD-denominated funds for their clients. BBOD is perfectly positioned for this very likely event due to accepting deposits in TUSD.

Overall, based on our observations, the performance of leveraged trading platforms has been extraordinarily strong during the current bear market. The unprecedented drops in cryptocurrency prices that happened last year have created a unique environment for the potential of a dynamic bounce back. The favourable economic situation (the volatile crypto market) should create a strong demand for BBOD derivatives products which will result in demand for BBD tokens. New future developments like a vanilla options offering will, in our view, support the upcoming year’s valuation of the token.

We initiate a strong bullish stance towards the BBD tokens, Overweight, 12-month EFV in the range of $1.23 – $12.26 per BBD token depending on the traded volume.


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Disclaimer : BBOD Research is an independent cryptocurrency research-house. The company has not received any remuneration (cryptocurrency or otherwise) in preparing this analysis. This report has been prepared solely for informative purposes and should not be the basis for making investment decisions or be construed as a recommendation to engage in investment transactions or be taken to suggest an investment strategy in respect of any financial instruments or the issuers thereof. This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research under the Market Abuse Regulation (EU) No 596/2014. Reports issued by Trade the Future Holding (“BBOD Research”) or its affiliates are not related to the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting or any other related services and are not recommendations to buy, sell, or hold an asset. The information contained in this report is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of this date and are subject to change without notice. BBOD Research will not be liable whatsoever for any direct or consequential loss arising from the use of this publication/communication or its contents. Trade the Future Holding and its affiliates hold positions in digital assets and may now or in the future hold a position in the subject of this research.