A beginner’s guide to the BNB Chain: The evolution of the Binance Smart Chain
The Binance Smart Chain (BSC) is now the BNB Chain. BSC, crypto exchange Binance’s layer-1 blockchain, recently announced the merger of the Binance Smart Chain and the Binance Chain to form the BNB Chain.
The relaunch of Binance’s layer-1 or base blockchain is part of a plan to link it to the protocol’s governance token—BNB—to expand and build on decentralization.
“People always think of BSC as part of Binance because it carries the company’s name,” said Binance CEO Changpeng Zhao. “We’ve done a lot of work to decentralize it and hope to make BNB go beyond Binance,” he added.
To date, Binance has invested more than $1 billion in the BSC ecosystem to support its ongoing and intensifying rivalry with the Ethereum network and other layer-1 blockchain systems. The effort hopes to alleviate criticisms regarding BSC being overly centralized.
Binance envisions positioning BNB as a token for the BSC ecosystem, which serves several sectors, including GameFi and the non-fungible token (NFT) industry. That should help make BNB essential to the eventual development of what Binance calls “MetaFi.”
What is the BNB Chain?
According to Binance CEO Chanpeng Zhao, “BNB” is an abbreviation for “Build ’N Build.” In a tweet, Zhao shared that “BNB stands for “Build the community, and let the community build, build, ’n build.”
The recently released BNB Chain comprises the BNB Beacon Chain for BNB Chain governance (i.e., staking and voting) and the BNB Smart Chain, which remains Ethereum Virtual Machine-compatible.
The BNB Chain aims to increase interoperability and develop the underlying infrastructure of the “world’s parallel virtual environment,” a step forward in Binance’s recent MetaFi efforts.
The BNB Chain promises users that it will be:
Evolution of the Binance Smart Chain
Binance and BNB were established in 2017, while BSC was introduced three years later. As Binance gained popularity, so did BSC. BSC was formed around the time the DeFi movement was also taking off. Over time as public interest in alternative financial solutions grew, the use cases of blockchain technology also increased.
According to Binance, the BNB token has continuously evolved since its debut. It was initially created as an ERC-20 token on the Ethereum network in 2017. By 2019, it switched over to the Binance Chain and fueled the establishment of the BSC network, which was officially launched in September 2020.
As a result of the token’s growth on BSC, Binance now considers BNB as the token for a greater ecosystem, including the Binance Chain and BSC. This move is part of the crypto giant’s effort to go beyond Binance. BNB is now the token for the BNB Chain.
The BNB token and the BNB ecosystem
The BNB token, formerly known as the “Binance Coin,” now stands for “Build and Build.” BNB is the cryptocurrency that fuels the BNB Chain ecosystem and the native coin of both the BNB Beacon Chain and the BNB Smart Chain. It also serves as a governance token, apart from fueling transactions on the BNB Chain, much like gas on Ethereum.
BNB ownership is required for participation in the BNB Chain decentralized on-chain governance. Alongside the rebranding, more advancements to BNB have also been announced, including technical upgrades to realize decentralization further. Such improvements are expected to benefit the community’s users, developers and projects.
Some of the upgrades Binance announced are:
The creation of BNB auto-burn, a new protocol that is both verifiable and objective
The v1.1.5. Bruno hard fork upgrade that increased the burn rate of BNB
You can trade BNB like any other cryptocurrency and also use it in various apps and use cases, including reducing Binance exchange trading fees, paying for transaction fees made via the BNB Chain, and purchasing goods and services online and in-store.
The BNB Chain ecosystem’s dual-chain architecture enables interoperability through the native BNB token, which powers the BEP-20 and BEP-2 token standards. But what distinguishes one from the other?
BEP-2 is the BNB Beacon Chain’s token standard, while BEP-20 regulates tokens on BSC. The BEP-20 token standard is frequently compared to Ethereum’s ERC-20 token since they are pretty similar in many aspects.
To sum up, the BEP-20 token standard is used to produce cryptocurrency tokens for the BNB Smart Chain, while the BNB Beacon Chain uses the BEP-2 standard.
Objectives of BNB
Following the BSC name change, some improvements were made available to users, project owners and developers connected to the BNB Chain community. Large-scale applications like Metaverse, GameFi, SocialFi and others will soon be incorporated into the BNB Chain.
Other key improvements made to the BNB chain include:
In their announcement, Binance also underscored that “the BNB Chain remains a community-driven, open-source and decentralized ecosystem.”
How to use the BNB Chain
Binance maintains that BNB has many use cases within the BNB Chain ecosystem and beyond. On its website, BNB Chain categorizes use cases for BNB under the following categories—payment, travel, entertainment, service and finance.
Transaction fees and more on the Binance ecosystem
BNB is widely used to pay transaction fees. According to Binance, approximately 2 million users have used BNB to pay trading fees amounting to more than 40 million BNB on more than 127 billion deals on Binance’s trading platform, alone.
Paying for standard trading fees on the Binance Exchange using BNB will allow users to enjoy a special discount. At present, each trade made on the exchange incurs a 0.1% fee, payable using traded assets or BNB. In addition, traders who mainly rely on Binance are encouraged to purchase BNB to save on transaction fees.
To purchase BNB on Binance Exchange, follow these steps:
Go to your Profile.
Access your Dashboard.
Navigate to Your Trading Fee Level.
Turn on the button that says, “Using BNB to pay for fees (25% discount).”
You can also use BNB outside the Binance trading platform since the cryptocurrency powers Binance DEX on the Binance Beacon Chain and various applications running on the BNB Smart Chain.
Here are other ways to use BNB within the Binance ecosystem:
Pay for goods and services online and in-store using your Binance Card or Binance Pay
Participate in Binance Launchpad’s token sales
Donate on Binance Charity
Provide liquidity on Binance Liquid Swap
Users can utilize BNB to pay for goods, buy virtual gifts and more. The integrations listed on the BNB page include Pundi X, CoinGate, Monetha and others.
You can use BNB to pay for airfare, hotel bookings and other travel amenities via TravelbyBit, Trip.io and Travala.com.
Users can utilize BNB on several integrated platforms, such as VIBE, allowing them to earn BNB from games. They can also use the cryptocurrency to purchase the copyright to music via MachiX or virtual land on Axie Infinity (AXS).
BNB also has many other practical uses, including hiring freelancers, creating smart contracts, accessing torrents and paying for cloud or web server subscriptions.
BNB is also useful for taking out loans, trading stocks, purchasing investments and splitting bills and expenses with others via finance applications like ETHLend, NAGA, Moeda, LNDR and Nexo.
The BNB Chain is also helpful for MetaFi development.
MetaFi, a combination of “meta,” which stands for the “meta ecosystem” and “Fi” for “DeFi,” brings together several projects like Metaverse, GameFi, DeFi, Web3, SocialFi and NFTs, under one tent.
MetaFi combines a wide range of blockchain functionality in a single meta ecosystem through the metadata that defines asset ownership. Thanks to the metadata standards used across platforms and blockchains, interoperability is possible.
Going by the MetaFi tagline, “Think BNB Chain, Think MetaFi,” the BNB Chain aims to facilitate innovation for MetaFi through the development of robust and interoperable projects with multichain capability and bridges to help with the massive volume of asset and data transfers.
Through the BNB Chain, the community of creators, developers and entrepreneurs can construct the infrastructure to enable the world’s parallel virtual ecosystem to function seamlessly.
Pros and cons of the BNB Chain
No application is perfect, not even the BNB Chain. While it offers low transaction fees, fast adoption, a bridging feature, enough funding, and localization, some are worried that the chain is centralized, has complicated and resource-consuming node operation and validation processes, and related innovations occur on Ethereum instead of its own environment.
Future of the BNB Chain
On top of the increased focus on MetaFi, the BNB Chain also announced a couple more technological advancements slated for the rest of 2022, including introducing BSC Application Sidechains and new BSC partition chains.
The BNB Chain tweet, “The future is decentralized,” illustrates the difference between Web2 and Web3 and what Web3 means for it moving forward.