BNB, initially known as Binance Coin, or also known by the acronym BNB, is one of the top performing cryptos of all time. Linked to the BNB Chain ecosystem, a brainchild of Binance, the globe’s first-ranking crypto exchange.
Today we delve into the essential aspects of BNB, its functions, and its significance in our niche.
BNB started as a utility token designed to provide Binance exchange users with reduced trading fees. However, it has significantly expanded its utility beyond the exchange. Today, BNB is integral to transaction fee payments on the BNB Chain, and it’s actively used in DeFi activities such as staking and yield farming.
Needless to say, Binance, the biggest exchange, is behind BNB with Changpeng Zhao, also known as CZ, who is the co-founder and former CEO. He is also the co-founder of BNB.
This review of Binance Coin (BNB) was created for informational purposes. This article is not intended for promotion.
The BNB Chain operates on a unique consensus model known as Proof of Staked Authority (PoSA), which merges elements of Proof of Stake (PoS) and Proof of Authority (PoA).
In this hybrid new system, validators are selected based on the amount of BNB they stake, requiring a minimum of 10,000 BNB. Making it a faster transaction processor with reduced costs.
The BNB ecosystem features a multi-layered blockchain architecture, with each chain tailored for specific functionalities.
The BNB Chain consists of various interconnected components collectively known as “One BNB”, each serving distinct functions. We can distinguish the following:
In the DeFi space, BNB is widely used for various activities including yield farming, providing liquidity, and earning additional tokens. It is also used to pay fees on decentralized exchanges like PancakeSwap, making it integral to the operation and efficiency of DeFi protocols.
BNB can serve as collateral for crypto-backed loans and investments on certain financial platforms, providing users with flexible financial solutions and leveraging opportunities.
In October 2022, BNB’s cross-chain bridge, which connects the BNB Beacon Chain and the BNB Smart Chain, was exploited for $100 million. A hacker tricked the bridge into minting extra BNB on the Smart Chain and swapped it for other cryptocurrencies before the Smart Chain was halted.
The issue was fixed through a hard fork, but additional vulnerabilities have since been discovered. There was controversy about rolling back the chain and it not being as decentralized as was thought.
If you want to participate in the Binance launchpad, you need BNB, which is essential for participating in token sales hosted on Binance Launchpad and Launchpool. Where holders of BNB are given exclusive access to new projects, and offered a gateway to early investment opportunities.
But Binance hasn’t had it easy their whole life. They were ‘terrorized’ throughout the years by lawmakers and regulators. As in early 2023, Paxos was ordered to wind down BUSD, Binance’s stablecoin. This led to BUSD’s market cap falling from over $15 billion to nearly zero.
While there isn’t a direct correlation, the relative absence of stablecoins on BNB seems to be holding down its TVL.
Later in June 2023, the SEC sued Binance, making the news of BNB adding a panic feature to stop its blockchain more concerning. Many took it as a sign that the BNB chain could be in trouble due to the lawsuit.
In the same year in November 2023, Binance settled with the DOJ for the largest settlement in history (of 4.8bn dollars), resulting in Binance agreeing to pay fines and implement strict KYC and AML measures. After this, CZ stepped down as CEO of Binance and was sentenced to just 4 months in prison, and a period under house arrest.
BNB Chain is actively working to establish itself as an AI-first layer, with a growing landscape of AI-related DApps and solutions being built on the platform. Currently, there are over 16 projects developing AI solutions on BNB Chain, covering areas such as AI agents, AI data infrastructures, and AI decentralized computing.
Several of these projects have already successfully conducted token generation events (TGEs) on top exchanges, while others are still in the product development phase, working closely with the BNB Chain team.
BNB Chain is setting a foundation for AI integration:
Learn more on AI agents via YourCryptoLibrary.
BNB Chain offers various grant programs and ecosystem funds to support developers. Through programs like the BNB Chain Builder Grant, open-source projects benefiting the developer community can receive financial support, marketing exposure, and technical assistance. Grants can reach up to $200,000 per project.
BNB started as a way for holders to pay less fees (up to 25% on spot and margin trading and 10% on futures trading) on the Binance exchange and BSC, but it grew to become the token that runs the entire BNB Chain ecosystem.
With BNB supporting a variety of applications including smart contracts, decentralized apps (dApps), and decentralized exchanges, it is also widely accepted for payments ranging from travel bookings to online services and everyday transactions.
BNB has a maximum supply of 200 million tokens, with about 140 million remaining after ongoing burns.The token address of Binance Coin (BNB) on the Ethereum network (ERC-20) is:
0xb8c77482e45f1f44de1745f52c74426c631bdd52
The BNB burn mechanism is a pivotal aspect of its market strategy, where a portion of BNB is periodically destroyed.
It includes quarterly auto-burns funded by Binance’s profits and real-time burns of a portion of gas fees. This deflationary strategy is aimed at achieving a long-term supply target of 100 million BNB.
Team tokens were vested over a four-year period, with 20% (16 million BNB) of the allocation released each year. Tokens allocated to angel investors and public sale participants had no vesting or lock-up restrictions.
The funds raised during the ICO were allocated to three key areas: 35% was used for upgrading the Binance platform and exchange system, 50% was allocated to branding, marketing, and educational initiatives, and 15% was reserved for emergencies. This structured approach supported the growth and stability of Binance.
Staking BNB on Binance is straightforward:
Staking directly on the BNB Chain involves a few more steps but offers more control:
Liquid staking allows you to stake your BNB while retaining liquidity, meaning you can still use the staked tokens in decentralized finance (DeFi) applications.
DEXs on the BNB Chain, such as PancakeSwap and Venus Protocol, offer alternatives for users who prioritize decentralization. These platforms enable users to swap tokens, stake, farm yields, and utilize BNB as collateral for lending and borrowing.
.
Since our last BNB review, the BNB ecosystem has experienced significant growth, with Binance launching several new products and services. Also, with CZ’s return and the possibility of Binance even being listed on US exchanges, the coin could see a significant boost in demand.
Their rolling out to new countries, their settlement, and ongoing resilience is a testimony to their credibility in this space.
In an interview, CZ was asked that if all Binance users want to withdraw their funds at the same time, Binance will be completely fine. He stated that they have more than 100% reserves on every single coin that we hold on behalf of our users. More on centralized exchanges and their reserves here.
Also, BNB Chain’s 2025 roadmap is packed with ambitious upgrades, including faster block times, AI integration, and gasless transactions, all interesting in being competitive with other chains. With many products built around this ecosystem, we simply find it hard to see them fail.
However, there are some controversies around the ownership of the token supply, with rumors that CZ controls as much as 64% of BNB’s circulating supply, possibly due to 40% of BNB’s initial supply going to Binance’s founders.
Also, regulation still appears to be a top concern for the team behind BNB, as evidenced by their apparent attempts to decentralize as much as possible.
Binance Coin has shown impressive growth from its beginnings as a trading fee token to a blockchain powerhouse supporting DeFi, NFTs, the metaverse and more. However, concerns remain around centralization and regulatory crackdowns, after all the adversity it has faced throughout its existence. However, BNB’s future seems bright if the team can continue to be number one in the world in offering crypto to the masses.
Disclaimer: Trading and investing in cryptocurrencies (also called digital or virtual currencies, altcoins) involves a substantial risk of loss and is not suitable for every investor. You are solely responsible for the risk and financial resources you use to trade crypto. The content on this website is primarily for informational purposes and does not constitute financial advice.
