Have you ever heard of Binance and their native token BNB? Binance is a company that was started in 2017 by Shane Pang Zhao as CEO and Hey Yi as Chief Marketing Officer. They created their native token BNB as a way to raise money for their company, just like how companies sell shares in an Initial Public Offering (IPO) in traditional finance.
Even though the year 2022 saw a bear market, it was an exciting time for the Binance rebranding team because they changed their name behind BNB from Binance coin to Build and Build in an attempt to distinguish themselves from the centralized Binance exchange from the supposedly decentralized BNB landscape.
The BNB Token
Pic Credit- Binance
BNB has a total supply of 200 million tokens. During the Initial Coin Offering (ICO), the Binance team received 80 million BNB, which is 40% of the total supply. 20% of that vested per year so they couldn’t dump on holders. Angel investors received 20 million BNB, which is 10% of the total supply. The remaining 100 million BNB, which is 50% of the total supply, was sold to the public. They started the price at 15 cents per token and raised about $15 million. From the money they raised, the Binance team used 35% to improve their platform, 50% for marketing and innovation, and 15% for emergencies.
The Rise and Burn of BNB
When the price of BNB went up during a bull market, it reached over $686 with a market cap of over $100 million. But something interesting happens with BNB. Every quarter, Binance uses 20% of their profits to buy back BNB tokens and burn them. This means they destroy the tokens, which makes the total supply go down. In fact, they recently burned over $48 million worth of BNB during 24th BNB burn, leaving only 153 million tokens in circulation. In December 2021, the team implemented BNB auto-burn. It uses the BNB price as well as the blocks generated on the BNB chain, each quarter to determine how many coins should be burned.
The BNB Chain and Beacon Chain
Pic Credit- Binance
Binance now refers to the whole world of BNB as the BNB chain. Within this chain, there is a special part called the Beacon chain, which used to be known as the Binance chain. The Beacon chain was created in April 2019 and it supports Binance Dex, a decentralized exchange. This means that people can trade BNB and other cryptocurrencies without relying on a central authority. The Beacon chain uses a programming language called Goland and a consensus mechanism where validators keep track of all the transactions and make sure everything is secure. They also vote to produce blocks, collecting and distributing fees among themselves.
BEP-2 and BEP-20 Tokens
Pic Credit- antiersolutions
Within the BNB chain, there are different types of tokens. The Beacon chain uses a token standard called BEP-2, while the BNB smart chain uses BEP-20 tokens. BEP-2 tokens are used for things like voting and governance within the BNB chain. On the other hand, BEP-20 tokens are used for smart contracts and other advanced features on the BNB smart chain. BEP-2 is only used for BNB chain governance, staking and voting. Holders get one vote per 50 BNB average daily holdings. It can also be traded and used for transaction fees on the Binance Dex which runs on the BNB beacon chain.
The BNB Smart Chain
Pic Credit- mpost
The BNB smart chain was created because the Beacon chain couldn’t support smart contracts. Smart contracts are like computer programs that automatically execute transactions when certain conditions are met. The BNB smart chain uses a programming language called Solidity, which is also used by Ethereum, another popular cryptocurrency. The BNB smart chain allows for cross-chain asset transfers, smart contracts, and compatibility with the Ethereum virtual machine. It also has lower transaction fees compared to Ethereum, which is pretty cool!
Other Cool Features of BNB
Aside from all the technical stuff, BNB has some other cool features. For example, Binance offers a cash back debit card that you can use to pay for travel on certain websites. You can also use BNB to buy virtual land or play games in the world of cryptocurrencies.
Since July 2022, the average block size for BNB smart chain has ranged from about 50,000 to 26,000 bytes with a typical speed of a bit over 3 seconds, which spikes sometimes during heavy activity. It has a different consensus mechanism for the BNB Beacon chain using proof-of-stake authority. Participants stake their BNB to become validators and when they propose a block, they receive a transaction fee. BNB smart chain recently increased their validator limit from 21 to 41, which seems like an attempt at further decentralization. You would need 10,000 BNB to become a validator, but regular users can become a part of this process by choosing a validator with which to stake their BNB and then they can receive part of the reward. The consensus method is fast, cheap and uses less energy than a proof-of-work model.
BNB chain is growing at a rapid pace which makes you want to keep up to date on all the news if you want to invest in this project.
