For those not familiar with Binance, it is the world’s largest cryptocurrency exchange based in China that has seen a massive growth over a period of just a few months. A portmanteau of the words ‘binary’ and ‘finance’, Binance offers users unparalleled speed of matching orders, liquidity and a competitively low transaction fees.
In a hope to drive customer loyalty, the exchange also launched a ‘Binance Coin’ (BNB), a native ERC-20 token that runs of the Ethereum blockchain, through an Initial Coin Offering (ICO) in August 2017. BNB has a strict limit of 200 million tokens, and were distributed with the following allocation:
10% to Angel Investors, 40% to the Founding Team of Binance, and 50% to various participants of the ICO.
Half of the funds procured from the ICO will be used for branding and marketing of the Binance platform, while one-third have been secured for development and upgrade of the system. The rest are safely tucked away to cope in case of unexpected emergencies.
While BNB has support for multiple utilities, the primary function of these tokens is to facilitate the payment of fees on the Binance platform, which includes trading fees, withdrawal fees, listing fees and others.
The best part of the Binance Coin is that it offers a significant discount on fees, with the rebate reducing by half every year. Hence, the first year marks a 50% discount, the second with 25%, the third having a 12.5% discount, the fourth by 6.25%, and by the fifth year there is no further concession.
Binance Coin can also be used to invest in ICOs that participate in Binance’s Launchpad program- A marketplace for the next generation blockchain projects. BNB can also be used to trade for other cryptocurrencies that are supported on the Binance Exchange.
Since the decreasing rebate also decreases the value of the BNB token, a repurchasing plan is put into effect that will utilize 20% of the company profits to buy back the coins in circulation and ‘burn’ them until 50% of the supply has been destroyed. This will help maintain the value of the remaining tokens and the trading perks. (About 30 million tokens have already been burned as of mid-April 2018.)
As mentioned in Binance’s whitepaper, there are also future plans to use BNB “as one of the key base assets, as well as, gas to be spent” when a decentralized version of Binance is built.
BNB is popularly purchased on the Binance exchange itself, although one can also use EtherDelta. If you’re holding BNB has an investment, it can be safely stored on various ERC-20 supported wallets, including hardware wallets.
A number of partnerships have been forged between various parties and Binance, further promoting the usage of the token. For instance, Uplive, a global live streaming platform, sells virtual gifts for BNB tokens. Monaco, a cryptocurrency payments platform, also supports BNB tokens. In a latest announcement, ChiliZ, a branch associated with the entertainment and sports company Mediarex, partnered with Binance to bring blockchain technology to gaming.
Though BNB was facing a slow market, just a few days ago, BNB saw a remarkable performance with an all-time high this June 2018, outdoing a number of cryptocurrencies in its sudden jump. Perhaps the overall performance of the exchange, the new trade listings on Binance, including the aforementioned collaboration with ChiliZ, could be plausible reasons to account for the recent spike and increased trading volumes for the Binance Coin.
Final Thoughts? Binance Coin is a unique coin with a practical use case, and as of now, is continuing to grow. An implementation of more features and add-ons could see greater adoption of BNB tokens over the future course of time.