What is Binance Coin? In-depth Analysis of Binance Coin (BNB)

I. What is Binance Coin?

Binance Coin (BNB) is a digital currency developed on the Ethereum blockchain platform according to the ERC20 standard. BNB is issued by Binance – one of the largest cryptocurrency exchanges in the world, for the purpose of maintaining and developing the system of Binance. BNB is used to trade with other coins on the Binance exchange along with BTC, ETH, and USDT.

II. History of Binance Coin

Changpeng Zhao, CEO of Binance, founded and worked with his associates to create the first coin of their own. Besides, the creation of BNB also involved the participation of many leading legal and financial consultants. And yet, the cryptocurrency Binance coin also has its own technical team. Ready to solve any question even the smallest of customers. This has made Binance Coin a powerful, extremely attractive name for investors.

BNB was launched through the Initial Coin Offering (aka ICO) that took place from June 26 to July 3, 2017 – 11 days before the official opening of the Binance Exchange. The initial issuance price of BNB is 1 ETH for 2,700 BNB or 1 BTC for 20,000 BNB. Although launched through an ICO, BNB is not of the nature of Binance’s profit sharing to its users, nor does BNB represent a user’s investment in Binance.

Binance Coin was born with the expectation of the creators of the Binance exchange about a long-term goal. It’s a middleman. It helps transactions between 2 other currencies go smoothly and fluently. With a fee for one exchange at a much lower rate than elsewhere.

Initially, BNB was issued as an ERC-20 token, running on the Ethereum network, with a total supply of 200 million coins. 100 million BNB was offered during the ICO, but the total supply is currently lower than 200 million due to periodic burn events in which Binance destroys BNB coins held in its vault.

Although initially built on top of the Ethereum network, ERC-20 BNB tokens were later swapped to BEP-2 BNB tokens in a 1:1 ratio. BEP-2 BNB tokens are a native cryptocurrency of the world. Binance Chain and mainnet were announced on April 18, 2019.

In September 2020, Binance launched Binance Smart Chain (BSC), a blockchain network that runs parallel to Binance Chain. This means that users can now find BNB in three different forms:

BNB BEP-2 on Binance Chain.
BNB BEP-20 on Binance Smart Chain.
BNB ERC-20 on the Ethereum network.

III. Striking Features of Binance Coin

1. Binance Coin Burning Mechanism

Burning coins is a mechanism used to remove cryptocurrencies from circulation, reducing the total supply permanently. Many cryptocurrency projects perform periodic coin burns to create a deflationary effect.

BNB applies two burning mechanisms. In the long run, this will reduce the total supply by 50%. The first mechanism consists of burning a portion of BNB to be used as gas fees on Binance Smart Chain (BSC) (introduced in BEP-95). The second mechanism includes quarterly BNB burn events.

Previously, the quarterly BNB burn was based on BNB trading volume on the Binance exchange. But from December 2021, Binance announced that the Quarterly Burn mechanism will be replaced by a new BNB Auto-Burn mechanism.

BNB’s auto-burn mechanism automatically adjusts the amount of BNB burned based on the BNB price and the number of blocks generated on BSC during the quarter. This brings greater transparency and predictability to the BNB community.

There are two methods to burn BNB. The first is the quarterly BNB burn events. The second method introduced in BEP-95 involves burning a portion of BNB to be used as gas fees on Binance Smart Chain (BSC).

2. BNB Burning Methods

The first is the quarterly BNB burn events.
The second method introduced in BEP-95 involves burning a portion of BNB to be used as gas fees on Binance Smart Chain (BSC).

Previously, the quarterly BNB burn was based on BNB trading volume on the Binance exchange. But in December 2021, Binance announced a new automated BNB burning system. This mechanism helps BNB to automatically adjust the amount of coins burned based on the price and the number of blocks generated on BSC in each quarter. This brings greater transparency and predictability to the BNB community.

3. Burn BNB Quarterly

As of January 2022, there have been 17 BNB burn events. A total of 33,199,679 BNB were burned, representing 16.59% of the total supply. During Q18 (January 2022), BNB completed its first quarterly automatic BNB burn. A total of 1,684,387.11 BNB were removed from circulation, including 6296,305493 BNB that were burned during the Pioneer Burn Program.

Burning Mechanism BEP-95

In early 2021, Binance CEO CZ shared his plan to increase BNB burn rate as the overall burn rate has been slower than he initially predicted. To speed up the process, Binance introduced a new burning mechanism through BEP-95 in November 2021.

BEP-95 is a Binance Development Proposal that adds real-time burning to the Binance Smart Chain (BSC). BSC automatically burns a portion of the gas fees collected by validators from each block. The more people use Binance Smart Chain, the more BNB will be burned, effectively promoting burning.

Since January 2022, BSC has burned around 860 BNB per day and the progress can be followed on Twitter. Since BEP-95 is solely dependent on the BSC network, it will continue to burn BNB even after reaching its goal of burning 100 million BNB.

BNB Auto-Burn

As mentioned, BNB Auto-Burn will automatically adjust the burn quantity based on BNB price and BNB supply and demand dynamics. This means that if the price of BNB falls, the amount of BNB burned will increase.

BNB Auto-Burn is a mechanism that is both objective and verifiable. Its purpose is to provide greater transaction transparency and predictability. Unlike Quarterly Burns, BNB Burns are automatically independent of BNB trading volume on the Binance exchange. Instead, it uses on-chain information from the BSC to calculate how much to burn.

When the total circulating supply of BNB falls below 100 million, the automatic burning of BNB will stop. However, the BEP-95 mechanism will continue to burn BNB. The BNB auto-burn mechanism follows a formula based on the data on the BSC chain of the total number of blocks generated and the average price of BNB:

B represents the burned BNB.
N is the total number of BSC blocks produced during the quarter.
P is the average BNB price.
K is the fixed price (originally set at 1000).

IV. Core Technology of Binance Coin

Similar to Ethereum and TRON, Binance has blockchain platforms for decentralized applications (Dapps). That is, it allows users to create or issue tokens on its blockchain. These tokens can be used as the currency of the Dapp or for any other purpose the token issuers can think of. Like ERC on Ethereum or TRC on TRON, BEP is a standard for tokens that run on the Binance Chain platform.

There are 3 most popular BEP standards of Binance which are BEP2, BEP8, and BEP20.

Wherein, BEP2 and BEP8 represent the token standard on Binance Chain, and BEP20 represents the token standard on Binance Smart Chain (BSC).

BEP8 is a special type of token also known as a “mini-token”, which marks an important milestone in enhancing the potential of the Binance Chain. The BEP8 token protocol is suitable for small, promising projects but does not have enough cost to issue BEP2 tokens at the present.

Compared with the BEP2 token, the issuance and listing of the BEP8 token are more convenient and reasonable. Users can spend as little as 3 BNB to generate BEP8 tokens. The way mini-token works can be compared to traditional stock market SME boards.

The BEP8 token also provides the following features:

Attractive blockchain use-case possibilities in areas like microfinance, cryptography, community incentive, etc.
Listing directly with BNB and/or BUSD without going through the delisting process validator’s vote.
Chance to be raised to BEP2 token when a small token has enough liquidity and maturity.

As mentioned above, BEP20 is a representative of the tokens on Binance Smart Chain, it is similar to TRC20 or ERC20.

V. What is BNB?

1. Detailed Information about BNB

Ticker: BNB
Blockchain: Binance Chain & Binance Smart Chain
Consensus: Tendermint
Algorithm: Delegated Byzantine Fault Tolerance (dBFT)
Token Type: Utility
Block Time: 1 second
Initial Supply: 200,000,000 BNB
Total Supply: 170,532,785 BNB
Circulating Supply: 153,432,897 BNB

2. BNB Allocation

Initially, the total supply of BNB coins was 200,000,000 BNB and distributed as follows:

ICO: 50% – 100,000,000 BNB
Binance Team: 40% – 80,000,000 BNB
Angel Investors: 10% – 20,000,000 BNB

However, Binance has a coin-burning mechanism, so the current total supply of BNB is only 170,532,785 BNB and will continue to be burned in the future. Burning coins out of circulation will make BNB more scarce, create buy demand and help grow stronger.

This has been demonstrated by the outstanding growth of BNB. Since the beginning of 2021, BNB has grown from $40 to a peak of $670 on May 11, 2021 (+1,675%), now BNB is holding at $300 (+750%).

3. BNB Noticeable Milestones

BNB Coin Funding Rounds

Binance raised capital through an ICO from investors. Over the 3 weeks since July 1, 2017, Binance has raised $15 million from investors at an incremental price.

BNB Release Schedule

Here is how Binance disburses BNB coins for each section:

ICO: Not locked. Investors receive BNB 5 days after the end of the ICO.
Angel Investors: Not locked. Get enough BNB coins after the ICO ends.
Binance Team: The amount of BNB coins held by the Binance team will be paid within 5 years from the end of the ICO. Pay 20% each time (16,000,000 BNB).

4. Use Cases of BNB

4.1. Binance Exchange

Listing Fees: According to the Binance Whitepaper, BNB coins will be used to pay for the listing fees of projects on the Binance exchange. However, the listing amount for each project is not announced by Binance and the proceeds from the listing will be 100% donated to the Binance Charity platform as of October 8, 2018.

Exchange Fees: BNB coin is used to reduce trading fees (maker & taker) on Binance exchange. Specifically:

BNB helps reduce trading fees on Binance exchange.

VIP Discount Fees: In addition, Binance also divides tiers for VIP accounts to enjoy preferential transaction fees in Binance’s trading services, including margin trading.

Use BNB to divide Tier for VIP accounts on Binance exchange.

4.2. Binance DEX

Proposal Fees: Projects that want to be listed on the Binance DEX need to send 1000 BNB with a listing proposal. If the project is approved, these 1000 BNB will be returned to the project. Otherwise, the project will lose this amount. This is a condition to avoid spamming for Binance DEX.
Listing Fees: When approved to list on Binance DEX, the project needs to send 1000 BNB listing fees to Binance DEX.
Binance Launchpad: Investors need to hold BNB coin to have the opportunity to invest in potential projects through Binance Launchpad. And once there is an investment rate, investors can only use BNB coin to buy tokens of projects.
Binance Charity: BNB is used to donate to charity programs through Binance’s Binance Charity platform.
Payments: In addition to the Binance ecosystem, BNB coin is also used to pay as a currency at stores and partners that accept BNB payments.
Binance Smart Chain: One of the biggest use cases and the biggest growth driver for BNB is the Binance Smart Chain ecosystem.

Similar to ETH in the Ethereum network, BNB is used as a means of payment for transaction fees as well as the main currency for the entire BSC ecosystem.

BNB has been thoroughly applied in the $ 25 billion DeFi ecosystem of Binance Smart Chain, including DeFi dApps in various fields such as AMM DEX, Lending, Yield Aggregator, etc.

This is evident by the fact that BNB is the main asset in the liquidity pair of Pancakeswap, used as collateral in Lending platforms like Venus, and used as a settlement currency in the Binance NFT Marketplace.

VI. How to earn & own BNB?

First, go to the exchange where you store your Binance Coin cryptocurrency. If you store this coin in an e-wallet, you can choose an exchange that is compatible with your wallet but that platform must support BNB. Through the exchange, follow the instructions to complete the sale or trade of your coin.

Most BNB purchases take place on the secondary market. That means you can buy and sell BNB on Binance.com and on other crypto platforms.

VII. BNB Recent Developments

The crypto market changes very quickly, so in order to keep up with the changing pace of the market, Binance has cleverly changed its roadmap to always become one of the pioneers and leaders in the crypto market.

2017-2019: Binance focused on the development of the exchange, launched many additional features for the exchange, and further developed the Binance Chain.
2020-2021: Focus on expanding the Binance Smart Chain ecosystem, attracting users and developers.
2021-2022: Binance is aiming to become Cross-chain Financial Infrastructure thereby ushering in the Internet of Value era. In order to achieve such a big goal, Binance will focus on doing a few things below:

Strengthen infrastructure and critical services.
Enhanced security for DeFi infrastructures.
Expansion under the Mass Adoption mechanism.
Encourage and motivate developers to develop in their own environment.

Binance will focus on several areas such as Algorithmic, Aggregation & Integration, Cross-chain & Multichain, Gamification, NFT, Synthetic, etc.

In the first half of 2021, the BSC system has developed very strongly, after having a full infrastructure, the BSC system has gradually built different DeFi Stacks. However, since the crash on May 19, 2021, the BSC system has been saturated for a long time until 2022. Even in the second half of 2021, Binance is still trying to launch projects on GameFi, NFT, and Metaverse but still not receiving attention from the community. That causes the cash flow to be withdrawn from the system.
Early 2022: Launch of BNB Chain and focus on MetaFi development.

VIII. Teams, Funds & Partners of Binance Coin (BNB)

1. Team

Currently, Binance is already the largest exchange in the world, so the team of Binance is extremely large and spread across the globe. However, Binance has the two biggest leaders, ChangPeng Zhao (Nickname: Uncle CZ) and Yi He.

ChangPeng Zhao holds the position of Founder & CEO of Binance and regularly interacts with the community via Twitter: @cz_binance

Yi He is holding the position of COO and does not interact much with the community.

Prior to founding Binance, CZ and Yi He was both active and experienced in the blockchain and cryptocurrency space, prior to that they were colleagues at OKCoin. One of the major exchanges at the time.

2. Investment Funds

Initially, a total of 14 Angel Investors invested in Binance, including investment funds: AU21 Capital, Dragon Gateway, and individual investors such as Chris McCann, Edith Yeung, Phil Chen, etc. Most of them are the amount raised from the community through the form of ICO.

3. Partners

Currently, Binance is already a big player in the crypto market, therefore, Binance has a large number of partners in the market including direct and indirect partners.

IX. Where can Binance Coin (BNB) information be updated?

Currently, Crypto users can fully consult, research, and analyze information about Binance Coin (BNB) through famous media newspapers such as Nasdaq, Bloomberg, Forbes, AP News, Yahoo!Finance, CoinTelegraph, Coindesk…

These media are constantly updated with useful information, new activities, outstanding events of Binance Coin (BNB), and all the topics surrounding it. Accordingly, Meta Lion Ventures continuously updates the topic of outstanding projects in Blockchain and hot events organized between Meta Lion & partners.

X. FAQs about Binance Coin (BNB)

What is Binance?

How to buy Binance?

Create a free account on the Binance website or the app.

Create a free account on the Binance website or the app.
Choose how you want to buy the Bitcoin (BTC) asset.
Create a free account on the Binance website or the app.
Store or use your Bitcoin (BTC) in Binance.

How much money do Crypto users need for Binance?

Binance.US has a minimum trade of $10.

Is Binance a good investment?

Indeed, Binance is among the most recognized and rapidly expanding cryptocurrency exchanges. Founded in 2017, Binance has developed into a cryptocurrency behemoth with over a hundred cryptocurrencies available for purchase and trading.

Conclusion

BNB (Binance Coin) is currently the most valuable, most famous, and strongest exchange coin today. BNB’s strong growth in just the past few years despite the market’s decline has proved the potential and wise strategy of CZ – CEO of Binance exchange and development team. This is also the favorite coin of many current investors, including myself. In terms of investment priority, BNB can be ranked on par with other major coins such as Ether, Ripple, Litecoin, or Bitcoin Cash.

However, all information and personal opinions are not construed as investment advice, you must make your own decision and take responsibility for that decision. We hope you have the right choice.