Summary Osprey BNB Chain Trust offers unique exposure to Binance Coin, but trades at a significant premium to its net asset value (NAV). BNB shows strong network metrics with high daily active addresses and trading volumes, but its valuation is high at 500x annualized fees. OBNB's shares are overvalued, with a 200% premium to NAV, making it an unattractive investment compared to other single-asset crypto funds. Expect increased supply of OBNB shares post-lockup, potentially leading to selling pressure; cautious trading is advised due to thin market activity. In mid-December, the Osprey BNB Chain Trust ( OBNB ) began trading via the OTC markets. Osprey Funds is one of the lesser-known digital asset product managers after larger peers Grayscale and Bitwise. I've covered one of Osprey's products in the past and this one is structurally similar to that one. However, OBNB is focused primarily on offering investors a way to allocate investment capital to Binance ( BNB-USD ) rather than Bitcoin ( BTC-USD ), Ethereum ( ETH-USD ), or other 'altcoins.' This makes OBNB a fairly unique offering, as it is the only fund traded in the US markets that offers investors exposure to BNB as far as I can tell. Even the diversified funds from Grayscale and Bitwise lack BNB allocations. In this article, we'll look at updated network metrics for BNB since I last covered the coin and the NAV rate share dynamics that, I think, make OBNB an avoid at this point in time. Binance Chain Despite recently being passed by XRP ( XRP-USD ) for the third-largest blockchain network valuation, BNB still commands a significant presence in the crypto community. For the month of December, BNB averaged 1 million daily active addresses - this put the chain behind only Tron ( TRX-USD ) and Solana ( SOL-USD ) for monthly DAAs on blockchains with a top ten market valuation: Monthly Average DAAs (Artemis) As recently as October, BNB had under 1 million monthly DAAs and trailed Sui ( SUI-USD ) in the metric. At $6.3 billion in total stablecoin supply, BNB is third among all blockchains in stablecoin market cap - though the overwhelming majority of that stable supply is derived from Tether ( USDT-USD ). Monthly DEX Volume (Artemis) From a DEX activity standpoint, BNB produced $56.2 billion in trading volume - good for third among the smart contract chains shown above and the highest level of single month DEX volume on Binance Chain since January 2022. Despite that surge in volume and a solid upward move in DAAs during the month of December, BNB produced just $19.1 million in blockchain fees. For context, the chain had a larger fee figure in March 2024 at nearly $34 million. Binance FD P/F Multiple (Token Terminal) 2024 was a year of positive price moves for BNB and also a year for multiple expansion. The multiple expansion point has been an ongoing story dating back to late 2021. Often one of the cheapest blockchains on a fully diluted price to fees multiple during the last bull cycle, Binance averaged a 462x annualized fee multiple in December and is on pace for a 500x multiple in January. To some degree, this is likely a product of BNB being a deflationary token. But there are blockchains that are cheaper than Binance on a fully diluted P/F ratio, while also possessing more monthly active users. Osprey BNB Chain Trust Overvaluation in the public blockchain markets can be largely subjective and vary wildly from chain to chain. However, in the public equity markets it's a bit easier to pinpoint when buyers are paying too much for something, and that is certainly the case with the Osprey BNB Chain Trust shares. Though OBNB shares are well off the highs from December 19th, at a $44 per share closing price on January 10th, OBNB shares trade at a sizable premium to net asset value. Followers of my work are likely familiar with the kind of crypto-focused closed end funds that speculators have had available in the OTC markets over the last few years. Osprey BNB Chain Trust is another straightforward fund that seeks to offer investors and/or traders a way to get single-asset exposure to digital assets; this one being BNB and nothing more. Inception: May 2022 OTC Trading Start: 12/18/22 Expense Ratio: 2.5% AUM: $62 million Market Cap: $134.4 million For that BNB exposure, secondary market investors are paying Osprey a 2.5% management fee and are arguably overpaying handsomely for that exposure given the net asset value of the fund compared to its OTC market share price: OBNB NAV Premium History (Osprey Funds, Author's Chart) At $44, the OBNB NAV rate premium on January 10th was over 200%. This is certainly not the most egregious NAV rate premium observable in the world of closed end crypto funds, but it's higher than most of the Grayscale single-asset funds with at least $10 million in AUM: Grayscale Fund Premiums (CoinGlass) Of the single-asset Grayscale funds with at least $10 million in AUM, only the Grayscale Chainlink Trust ( GLNK ) trades with a larger NAV premium than OBNB. The big thing to keep in mind with funds like this is they're generally offered to accredited investors at NAV. The way it typically works is a qualified buyer can purchase shares of OBNB at the net asset value through private placement, wait out the lockup period, and then sell the shares on the secondary market. If the shares are trading at a large premium to NAV on the secondary market, it creates an incentive for the private placement investor to sell those shares upon lockup expiration to pocket the spread between NAV and market price. Given accredited investors have a 12-month lockup period before the shares can be sold on secondary, it's important for all investors and traders of OBNB to pay attention to the shares outstanding trend to get a sense for when lockups expire. Admittedly, the trend for OBNB is a bit difficult to decipher: OBNB Shares Outstanding (Osprey Funds, Author's Chart) Dating back to the fund's inception, the shares outstanding have been a bit all over the place with 3.7 million shares at inception, just 627k shares in August 2022, and then 3 million shares again in May 2024. I've added the NAV per share with the shares outstanding in the chart above, and it appears evident that there was a 1-for-6 reverse split in August 2022 and then a 3-for-1 stock split last May. The chart below is my attempt at a double-split adjustment to show a more useful trend in long term OBNB share issuance: Split-Adjusted OBNB Shares (Osprey, Author's Chart and Calculations) Assuming my math is not wrong on both of these split adjustments, OBNB shares outstanding grew by 26% between January 1st and March 1st 2024. By the end of May, the adjusted shares outstanding figure was 60% higher than it was at the beginning of 2024. As of January 10th, the adjusted shares outstanding figure is 91% higher than it was at the beginning of 2024. My interpretation of this is that a large number of OBNB lockups are starting right now, and the majority of the unlocked shares from issuance over the last 12 months will be available to sell by the end of May. Closing Thoughts At this point, I don't have any real issue with buying BNB if you like that blockchain and want to mess around with the applications that have been developed on it. At 500x fees, I don't know that I'd call BNB cheap as an investment. I definitely wouldn't call OBNB cheap, given those shares command an additional premium to the BNB held by the fund. As I try to stress in most of these single-asset closed end fund articles, 'value' is generally subjective and just because I think it's silly to pay more than three times what something is worth, it doesn't mean the rest of the market will agree. With only a few weeks of trading history, OBNB is a very thinly traded fund. According to Seeking Alpha's historical quotes , less than 12,000 shares have been traded since December 19th. I'd be very careful trading OBNB shares from the long side, as I expect supply availability to intensify over the next 4 to 5 months. The only question is will there be enough motivated buyers to satisfy any potential post-lockup selling pressure from accredited investors who figure to have an incentive to capture the secondary premium? Personally, I'm not betting on it.
