Binance Coin (BNB) is the native digital asset for the popular crypto exchange platform Binance, the Binance Chain (built for BNB transactions), and the Binance Smart Chain (Binance’s smart contract platform).
Although BNB can be traded on the open market, it is not commonly accepted on other exchanges.
Binance Coin started as an Ethereum-based ERC-20 token but switched to its own native asset (BEP2 tokens) with the release moved to its own network, the Binance Smart Chain (BSC), in 2019.
As a utility token, its main utility is to be used for trading/swapping fees on the Binance exchange, the Binance Chains, and the protocols built on top of the Binance Smart Chain (BSC). You get a discount on trading fees if you trade with BNB.
It can also be staked on the BSC to secure the network and for governance voting. It can also be used for commerce when using a Binance credit card or Binance Pay services.
A key feature of the Binance Coin is that when users swap or use apps in the Binance ecosystem, the fees generated can be paid with other tokens, but users enjoy a discounted fee when paying with BNB.
BNB has a limit of 200 million tokens, half of which were sold in an Initial Coin Offering (ICO) in 2017 while 10% went to angel investors. The founding team kept 40% of the tokens.
Another key feature of the Binance Coin is that its supply is set to decrease as a portion of all fees are burned through the BNB Auto-Burn program. The protocol will burn tokens every quarter until the supply drops below 100 million tokens.
What is Binance Coin (BNB)?
Binance Coin (BNB) is a cryptocurrency that was initially created by Binance, one of the largest cryptocurrency exchanges in the world.
It was designed to be used primarily on the Binance exchange to facilitate trading and reduce fees. BNB was initially launched as an ERC-20 token on the Ethereum platform but has since migrated to its own blockchain, the BNB Chain.
It was launched through an Initial Coin Offering (ICO) that took place from June 26th to July 3rd, 2017. The ICO offered 10% of the BNB tokens to angel investors, 40% to the founding team, and the remaining 50% to various participants.
Almost half the funds raised during the ICO were intended to be used for Binance branding and marketing, while around one-third were used to build the Binance platform and perform necessary upgrades to the Binance ecosystem.
There is a strict maximum supply of 200 million BNB tokens.
How Does Binance Coin (BNB) Work?
Binance Coin operates on the BNB Chain.
The BNB Chain utilizes a hybrid consensus mechanism called Proof-of-Staked Authority (PoSA). This mechanism combines elements of Proof of Stake (PoS) and Proof of Authority (PoA) to achieve high transaction throughput and low fees.
The BNB Chain is also compatible with the Ethereum Virtual Machine (EVM), allowing developers to easily build and deploy decentralized applications on the platform.
This compatibility makes it attractive to developers and could lead to increased adoption and growth of the BNB ecosystem.
Additionally, the BNB Chain utilizes the Binance Bridge to connect to other blockchains, enhancing interoperability and expanding its potential use cases
Advantages of Investing in BNB
There are several advantages to investing in BNB:
- Growing Ecosystem: The BNB Chain has a growing ecosystem of decentralized applications (DApps), DeFi projects, and NFTs, which increases the demand for BNB.
- Strong Community: BNB has a large and active community, which contributes to its development and adoption.
- Deflationary Tokenomics: BNB has a burn mechanism that regularly reduces its supply, which can potentially increase its value over time. Each quarter, Binance uses 20% of its profits to buy back BNB on the open market. These tokens are then “burned,” making them permanently unavailable. All burning transactions are recorded on the Binance blockchain, ensuring transparency. This burn mechanism helps manage ongoing supply and demand pressures and could contribute to long-term value appreciation.
- Low Fees: The BNB Chain offers lower transaction fees compared to other blockchains like Ethereum, making it more cost-effective for users.
Disadvantages of Investing in BNB
While there are many advantages to investing in BNB, there are also some potential disadvantages to consider:
- Dependence on Binance: BNB’s value is closely tied to the success of the Binance exchange. Any issues or negative news surrounding Binance could negatively impact BNB’s price. This dependence makes it crucial for potential investors to assess Binance’s performance and reputation.
- Regulatory Uncertainty: The cryptocurrency market is subject to regulatory changes, and any unfavorable regulations could affect BNB’s value.
- Market Volatility: Like all cryptocurrencies, BNB is subject to price fluctuations and market volatility.
Use Cases of BNB Within the Binance Ecosystem
BNB has a wide range of use cases within the Binance ecosystem:
- Trading Fees: Users can use BNB to pay for trading fees on the Binance exchange and receive discounts. The fee structure changes based on 30-day trading volume and account level.
- Binance Launchpad: BNB is used to participate in token sales on Binance Launchpad, allowing users to invest in new cryptocurrency projects. Binance Launchpad helps promising projects raise funds and gain exposure to a wider audience.
- Binance DEX: BNB is the native token of Binance DEX, a decentralized exchange built on the BNB Chain.
- BNB Smart Chain: BNB is used to pay for gas fees on the BNB Smart Chain, a blockchain platform for developing DApps and DeFi projects.
- Binance Liquid Swap: BNB can be used to provide liquidity on Binance Liquid Swap, a platform for exchanging cryptocurrencies with low slippage.
- BNB Vault: Users can stake BNB in the BNB Vault to earn rewards.
- Social Media Services: BNB can be used as a gift token on live streaming platforms.
Team Background
Launched with an ICO in 2017, Binance is one of the world’s largest and most liquid crypto exchanges to date.
Apart from functioning as an exchange, it also features several user-friendly DeFi products, as well as a crypto Visa card and NFT platform.
Binance was founded by He-Yi and Changpeng Zhao, who is the company’s CEO.
Zhao, who is more popularly known as CZ, has worked for crypto companies like Blockchain.info and OKCoin before co-founding Binance.
The BNB Chain is developed and maintained by a team of experienced blockchain developers and engineers.
BNB Token Metrics:
- Circulating Supply: Around 145.5 million BNB tokens.
- Total Supply: Approximately 168.1 million BNB tokens.
- Maximum Supply: Initially set at 200 million BNB tokens, with a goal to reduce to 100 million through periodic burns.
- Number of Holder Addresses: Over 3 million unique addresses hold BNB tokens.
Notable Projects in the BNB Ecosystem
The BNB Chain ecosystem hosts an array of innovative projects across various sectors. Here are some notable projects:
- PancakeSwap: A leading decentralized exchange (DEX) on BNB Chain, PancakeSwap offers users the ability to swap tokens, provide liquidity, and participate in yield farming. Its user-friendly interface and low transaction fees have contributed to its widespread adoption.
- Venus Protocol: A decentralized money market platform, Venus allows users to lend and borrow cryptocurrencies directly on the BNB Chain. It provides a secure and efficient way to earn interest or obtain loans without intermediaries.
- Alpaca Finance: Specializing in leveraged yield farming, Alpaca Finance enables users to maximize their returns by providing leveraged positions in yield farming pools. This platform has become a significant player in the DeFi space on BNB Chain.
- Radiant Capital: A cross-chain lending and borrowing protocol, Radiant Capital allows users to deposit and borrow assets across multiple blockchains, enhancing liquidity and accessibility within the DeFi ecosystem.
- KiloEx: A high-performance decentralized exchange focusing on perpetual contracts, KiloEx emphasizes risk management and capital efficiency, providing traders with advanced tools and features.
- Kinza: An on-chain money market platform, Kinza offers dynamic interest rates and real yield opportunities for lenders, catering to varying risk tolerances and investment strategies.
- Chainlink: As a decentralized oracle network, Chainlink provides reliable, tamper-proof data feeds to smart contracts on BNB Chain, enabling a wide range of decentralized applications to function securely and accurately.
- Baby Doge Coin: A meme-based cryptocurrency, Baby Doge Coin has gained popularity within the BNB Chain community, known for its active community engagement and charitable initiatives.
Notable Events in Project History
Binance Coin (BNB) has experienced several notable events since its inception:
- Initial Coin Offering (July 2017): BNB was launched through an ICO, with 100 million tokens available at approximately $0.15 each.
- Transition to BNB Chain (September 2020): Originally an ERC-20 token on Ethereum, BNB migrated to Binance’s own blockchain, enhancing transaction efficiency.
- Regular Coin Burns: Binance conducts quarterly burns to reduce BNB’s total supply, aiming to decrease it from 200 million to 100 million tokens, potentially increasing value.
- Rebranding to Build’N’Build (February 2022): The token was renamed from Binance Coin to Build’N’Build, reflecting its broader utility beyond the Binance platform.
- All-Time High Price (December 2024): BNB reached its peak price of $755.56, marking significant growth since its launch.