Friday, July 12, 2024
Blockchain

The Role of BNB in Shaping the Future of Web3






The BNB token, often mistaken as Binance’s exchange token, is actually the native coin of the BNB Chain ecosystem. As one of the most diverse and utilitarian coins in the crypto sector, BNB supports a broad and dynamic Web3 ecosystem, according to the BNB Chain Blog.

What is BNB Chain?

BNB Chain is a decentralized and community-driven ecosystem initially consisting of two major components: the BNB Beacon Chain, which handles governance, and the BNB Smart Chain (BSC), an EVM-compatible execution chain. The BNB Beacon Chain will soon sunset, with its functionalities transferred to the BSC. Validators of the Beacon Chain are advised to migrate their tokens to BSC to avoid disruptions.

Currently, BNB Chain’s multichain architecture comprises three major components:

  • BSC: A layer-1 platform offering robust EVM compatibility and a Proof-of-Stake Authority consensus model.
  • opBNB: A Layer 2 solution built using the OP Stack, delivering high performance with 5-10K TPS.
  • BNB Greenfield: Focused on decentralized data storage with enhanced privacy and security.

These components integrate into a cohesive solution called “One BNB,” with the BNB token fueling the ecosystem.

The Evolution of BNB Token

Launched through an Initial Coin Offering (ICO) in mid-2017, BNB transitioned from an ERC-20 token on Ethereum to the BNB Chain during its mainnet launch in April 2019. The token, which stands for “Build and Build,” acts as a governance token and is crucial for transactions within the BNB Chain.

BNB Burns

BNB uses an Auto-Burn system to reduce its total supply to 100,000,000 BNB gradually. The burn amount is adjusted based on BNB’s price and the number of blocks generated on BSC during a quarter. Additionally, BNB employs a real-time burning mechanism based on gas fees. Validators determine the ratio of gas fees burned in each block at a fixed rate.

The latest BNB burn event saw 1,944,452.51 BNB burned, valued at approximately $1.17 billion at the time. The transaction details can be viewed here.

BNB Use Cases

BNB’s utility extends across decentralized and centralized use cases, along with other applications:

Decentralized Use Cases

  • Pay Transaction Fees: Users must pay fees in BNB to interact with BSC and opBNB.
  • Explore Dapps: BNB enables interactions with over 5,000 Dapps on BNB Chain.
  • Earn in Dapps: Users can earn BNB and other tokens by participating in gaming apps and completing quests.
  • Stake and Earn Passive Income: Staking BNB supports BSC operations and rewards participants.
  • Governance: BNB holders can participate in network governance and vote on proposals.
  • Pay DEX Fees: BNB is used to pay fees on decentralized exchanges like PancakeSwap.

Centralized Use Cases

  • Save on Trading Fees: BNB holders receive discounted trading fees on Binance and can qualify for its VIP program.
  • Exclusive Token Sales: BNB holders can access exclusive token sales on Binance Launchpad.
  • Shop Using BNB: BNB can be used for shopping online via Binance Pay.
  • Liquidity Rewards: BNB holders can earn yield by providing liquidity on Binance Liquid Swap.
  • Lending BNB: BNB can be staked on Binance Launchpool to earn tokens from new projects.
  • Stake BNB in BNB Vault: The BNB Vault allows users to earn various rewards within the Binance ecosystem.
  • Borrow Crypto: BNB can be used as collateral for loans on Binance’s loan platform.

Other Use Cases

  • Book Flights and Hotels: Platforms like Travala.com accept BNB for travel bookings.
  • E-Commerce Payments: BNB is accepted on platforms like Shopify via Lunu.
  • Entertainment: Participate in games and win BNB rewards.
  • Services: Pay for real-world and digital services with BNB.
  • Finance: Use BNB in various financial services.

Where to Get BNB

BNB can be acquired on centralized exchanges like Binance, decentralized exchanges, or earned through staking and other activities. It can also be received from peers or purchased using credit/debit cards via wallets like Trust Wallet.

Conclusion

The BNB token has established itself as a cornerstone of the BNB Chain ecosystem. With extensive use cases and robust tokenomics, BNB is poised to drive innovation and build a resilient blockchain community.

Image source: Shutterstock

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