Hello, fellow crypto enthusiasts! This week CZ shared a interesting video with important informations about BNB, and im sharing with you all a summary of this video!!
What happens when you combine binary and finance? Oh you get Binance, the largest cryptocurrency exchange in the world, If you're looking to invest in Binance's native token, BNB, you might be perplexed by the plethora of name changes and rebrands. Let's embark on a journey to understand this evolution.
Binance's Birth and BNB's Genesis
Back in July 2017, Binance emerged, founded by Changpeng Zhao, better known as CZ, alongside co-founder Yi He. CZ is the current CEO and the face of Binance. Around this time, the concept of Binance Coin (BNB) came into being.
From ICO to Rebranding: 2022's Transformation
BNB's initial days involved an Initial Coin Offering (ICO), mirroring the traditional Initial Public Offering (IPO). However, the real buzz arrived in 2022 when the Binance rebranding team decided to change BNB's name to "build and build." This move aimed to dissociate BNB from the centralized Binance exchange, aligning it with the notion of a decentralized BNB landscape.
Understanding BNB's Supply and Distribution
BNB boasts a total supply of 200 million tokens. During the ICO phase, the Binance team received 40% of this total (80 million BNB). Crucially, 20% of this allocation vested annually to prevent any sudden dumping on holders. Angel investors were granted 10%, equivalent to 20 million BNB, while the public sale made up the remaining 50% (100 million BNB). The ICO commenced with an initial price of $0.15, ultimately raising approximately $15 million. Of these funds, 35% were allocated to platform and exchange enhancements, 50% for brand marketing and innovation, and 15% reserved for emergencies during the peak of the bull run.
BNB's Soaring Price and the Deflationary Mechanism
The price of BNB skyrocketed, surpassing $686 with a market capitalization exceeding 100 billion. This impressive rise is partly due to a deflationary mechanism implemented through quarterly token burns. Notably, the team committed to destroying half of the total supply over time, amounting to 100 billion BNB. At the time of writing, the 24th BNB burn had recently occurred, with a total of 48 million BNB already incinerated, leaving a circulating supply of 153,000,000 BNB. These burns used to be based on BNB trading volume on the Binance exchange, but in December 2021, the team introduced the BNB Auto Burn mechanism. This innovation utilizes the BNB price and blockchain activity to determine the number of coins to be burned. Moreover, it permits users to burn lost tokens retrieved through the BNB Pioneer program, the Bruno. Furthermore, the hard fork brought the ability to burn a portion of gas fees on the BNB chain.
BNB Auto Burn and Addressing Centralization Concerns
BNB's deflationary measures sound promising, fostering price maintenance and appreciation in theory. Yet, they can bring certain challenges, including supply constraints, heightened transaction costs, and potential centralization. However, Binance is actively addressing these concerns, having invested over a billion dollars in the BNB ecosystem.
Exploring the BNB Chain Ecosystem
Diving deeper into the BNB universe, it is now referred to as the BNB chain. Picture it as an expansive umbrella, sheltering numerous exciting projects. An interesting fact: it's probably not the Umbrella Corporation. The founding member of the BNB chain, once known as Binance Chain, is now referred to as BNB Beacon Chain. This chain came into existence in April 2019, focusing on supporting Binance DEX, the decentralized exchange that aimed to provide a superior user experience compared to other sluggish and cumbersome exchanges. Operating with the Golang programming language, it employs a peer-to-peer consensus mechanism with validators responsible for data maintenance, transaction validation, and block production, distributing fees among themselves. Essentially, these validators serve a role akin to Bitcoin or Ethereum's miners. The block size is one MB, and blocks are generated rapidly, accommodating thousands of transactions. Interestingly, BNB Beacon Chain employs a BEP 2 token standard, a distinction from its counterpart, BNB Smart Chain, formerly known as Binance Smart Chain, which utilizes the BEP 20 token standard.
BNB Smart Chain: A Fork and Transition
BNB Smart Chain was born as a response to BNB Beacon Chain's incapacity to support smart contracts. The team decided to fork Ethereum's code, making it faster and more cost-effective. If you're unfamiliar with forking, think of it as a flattering imitation - taking someone else's code and making minor adjustments. This move simplified the process for developers migrating their projects to BNB Smart Chain without extensive modifications. Additionally, BNB Smart Chain operates using Solidity, Ethereum's widely adopted programming language. It facilitates cross-chain asset transfers, smart contracts, and EVM compatibility (Ethereum Virtual Machine), all while maintaining transaction fees substantially lower than Ethereum's, usually staying below $1. This development was akin to a blessing when Ethereum's fees were skyrocketing. However, due to the lower costs and ease of creating new tokens, scammers and rug-pullers exploited the system, creating projects with minimal accountability. Moreover, BNB offers additional features such as its cashback debit card, usability for travel on specific platforms, and applications in the world of crypto for activities like virtual land acquisition and gaming.
BNB's Fast-Paced Growth and Regulatory Challenges
As of July 2022, the average block size for BNB Smart Chain ranged from approximately 50,000 to 26,000 bytes, with a typical block production time slightly over three seconds, occasionally spiking during periods of high activity. BNB Smart Chain adopts a different consensus mechanism compared to BNB Beacon Chain, employing proof of stake authority. Validators stake their BNB holdings to become validators and, upon proposing a block, receive transaction fees as rewards. Notably, BNB Smart Chain recently expanded its validator limit from 21 to 41, seemingly in a bid to enhance decentralization. To become a validator, one needs to possess 10,000 BNB. Regular users, too, can engage in this process by selecting a validator for staking their BNB, thereby earning a share of the rewards. This consensus model is renowned for its speed, affordability, and energy efficiency, distinguishing it from the proof of work paradigm.
Exploring BNB Chain's Diverse Projects
Apart from the primary chains, the BNB Chain ecosystem comprises several interesting projects. Notable among these is Binance Launchpad, serving as an ICO platform granting early access to new projects for BNB holders. The ecosystem also includes BNB Greenfield, launched in 2023, which may sound agricultural, but is actually a decentralized data storage system. Here, data is distributed across multiple computers or nodes, allowing large-scale off-chain data storage without reliance on centralized entities like Google or Apple's cloud services. This architecture bolsters security against hackers, enhances user control, preserves freedom and privacy, and streamlines data transfers to BNB Smart Chain for interaction with decentralized applications.
BNB Chain's Resilience Amid Regulatory Challenges
Despite the regulatory challenges and the SEC's lawsuit against Binance in June, BNB Smart Chain has been resilient. It introduced OP BNB, a layer-two testnet powered by Optimism, in response to network scaling requirements. Moreover, in July of the same year, BNB Beacon Chain successfully completed its Zang Hang hard fork, further reinforcing network security. The BNB chain ecosystem is expanding at such a rapid pace that staying updated with the latest developments is crucial for potential investors and enthusiasts.
Conclusion: The Ever-Transforming BNB Ecosystem
In conclusion, Binance's evolution from Binance Coin (BNB) to the BNB chain is a captivating journey through the world of cryptocurrency. It encompasses an array of innovative solutions, ranging from efficient blockchain platforms to decentralized data storage systems. While facing regulatory challenges, the BNB ecosystem continues to adapt and grow, making it a dynamic space to watch. Whether you're a seasoned trader or a curious observer, BNB's transformation offers a glimpse into the ever-evolving landscape of digital finance.
