What Is BNB?

Sep 24, 2021

Defining Binance Coin (BNB)

Binance Coin (BNB) is the cryptocurrency that powers the Binance Ecosystem. Binance, as you probably know, was founded in 2017 by Changpeng Zhao (CZ), and as of July 2021, is the largest cryptocurrency exchange in the world by trade volume. 

BNB was primarily meant to operate on the Binance Chain mainnet, which launched on April 23, 2019. The BEP-2 BNB is the native token of the Binance Chain, but there is also an ERC-20 version of BNB which you can use on the Ethereum Network, and which was the original version of BNB. BNB is exchangeable 1:1 across any mainnet.

Binance Smart Chain (BSC) was the second network launched by Binance. BSC has all the properties of Binance Chain, but is an Ethereum Virtual Machine-compatible network made for cross-chain interoperability.

To review, BNB powers the Binance ecosystem and is available on multiple blockchain networks:

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


What Is The Purpose Of BNB?

The utility of BNB has expanded over the years as the Binance ecosystem has grown. While its original use case remains the key raison d’etre for BNB, its uses across other chains drives broader adoption of its use.

Original BNB Use Case

Originally, BNB was a utility token on the Ethereum network with uses limited to Binance Exchange. It’s primary use cases was to pay transaction and trading fees on the Binance Exchange. Users enjoyed a 50% discount on those fees when paying with BNB in the first year of its existence.

The BNB whitepaper specified its utilities as the following:  

  1. Exchange fees
  2. Withdraw fees
  3. Listing fees
  4. Any other fees


BNB On Binance Chain

The original purpose envisioned for Binance Chain and Binance DEX was to create an alternative marketplace for issuing and trading digital assets in a decentralized manner. From the DEX, anyone could issue new tokens to digitize assets, and use Binance Chain as the underlying exchange/transfer network for the assets. BC and Binance DEX essentially helped users develop, launch, and list a token all within the Binance ecosystem.


‍On Binance Chain (BC) and Binance DEX, BNB is a BEP-2 token. There it is used as gas for transaction fees. This means that users need to hold small amount of BNB in their wallet to execute transactions. BNB BEP-2 was also used for paying trading fees on the Binance DEX.

BC did not provide smart contract functionalities. Due to this limitation, BC was underutilized compared to Binance Smart Chain. The original BC did not support smart contract functionalities and thus was not able to provide core functions needed for dApps including DeFi. 

BNB On Binance Smart Chain

BC does not provide smart contract functionalities - a significant hindrance to its potential uses. Binance Smart Chain (BSC) fixes that by integrating smart contract functionality while running parallel to BC. BSC also boasts compatibility with the Ethereum Virtual Machine (EVM). 

Because BSC was developed to be EVM-compatible, it launched with support for the dApps available on Ethereum. Developers making dApps on Ethereum can easily port their code to BSC. This is why Metamask functions the same on BSC as it does on Ethereum.

Because of the compatibility with EVM, BNB on the Binance Smart Chain has significantly more utility than BNB on Binance Chain. BSC now powers hundreds of projects - significantly more than BC - due to its EVM compatibility. BNB can be used for DeFi dApps, liquidity pools, DEX trading, or as a payment medium in NFT marketplaces. 

Differences Between BC and BSC With BNB

On BSC, BNB uses the BEP-20 technical standard and, as on BC, BNB is used to pay transaction fees. The BSC, however, uses the Proof of Staked Authority (PoSA) consensus method which enables users to delegate and stake BNB, or earn a portion of network block rewards. The difference in consensus method provides a distinct utility for BNB on Binance Smart Chain compared to BNB on Binance Chain. 


BNB Powering The Binance Ecosystem

Binance has leveraged its position as one of the leading centralized cryptocurrency exchanges within the industry to provide further utility for BNB. Aside from its functions on Binance Chain and Binance Smart Chain, BNB is now used for multiple services provided directly on Binance Exchange and outside the centralized exchange.

Direct Services On Binance Exchange

Users can deploy their BNB to access crypto-financial services and products such as Staking, Launchpool, BNB Vault, or Liquid Swap in exchange for crypto rewards with Binance Earn

Binance Card is a Visa debit card allowing you to pay for shopping expenses, bills, mortgage payments, and other expenses with BNB. Users can pay with BNB at over 40 million merchants worldwide.

You can also use BNB as collateral for a simple and straightforward crypto loan. You can borrow BTC, ETH, BUSD, USDT, and various digital assets from 7 to 180 days.

Use Cases Outside Binance Exchange

BNB has managed to break out of the confines of the Binance Ecosystem in the way of adoption across other platforms. The influence of Binance as a market leader in several facets has facilitated this since BNB is essentially backed by the strength of the Binance ecosystem. As a result, BNB is accepted as a valid form of payment for the following services provided according to the official Binance homepage as of July 2021. 

1. Payment

PundiX, Monetha, Coinpayments, CoinGate, Coinify, and NOWPayments. 

2. Travel

TravelbyBit, Trip.io, and Traval.com

3. Entertainment

Decentraland, Loom Network, VIBE, MachiX, AERON, Axie Infinity, Steemmonster, and ADAMANT Messenger

4. Service

DENT, BitTorrent, Storm, Canya, MyWish, PureVPN, and CenterServ

5. Finance

ETHLend, Moeda, LNDR, Nexo, NAGA, and Bitcoin Suisse

BNB Supply And Quarterly Burns

Binance schedules quarterly BNB burns to permanently reduce the supply of BNB. This activity has been proposed in the original whitepaper and has been followed through by the organization to date. The amount of BNB burned is calculated based on Binance’s overall quarterly trading volume. Quarterly coin burns will continue until a total of 100,000,000 BNB are destroyed, which represents 50% of the total BNB supply.

As of July 2021, Binance has burned 30,567,063 BNB from the 200,000,000 BNB total supply. This represents approximately 30.56% of all tokens scheduled for disposal. 


BNB was originally created to facilitate trading activities on the centralized Binance Exchange. BNB has now grown beyond its original scope and provides users with various utilities through the Binance ecosystem and serves as the native token for two different mainnets. As one of the leading global cryptocurrency exchanges in the industry, Binance has continued to exemplify progress and growth. 

Its continuous success track record is not only traceable through its quarterly token burns, but also identifiable from the explosion of dApp development and on-chain activities on the Binance Smart Chain.

But in the end, the future success of BNB boils down to two main factors. The centralized Binance Exchange must find a way to stay on top despite the ever changing regulatory landscape. And Binance Smart Chain must stay relevant as a viable mainnet for future blockchain projects. Binance has showcased success after success up until now, but staying relevant in this fast paced industry is a tall task for any potential incumbents.

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