BNB (BNB) refers to the native coin used on the BNB Smart Chain (former Binance Smart Chain) known as the BSC network, and the BNB Beacon Chain (former Binance Chain), known BNB network. The BSC and BNB networks operate separately and have their own distinct features and functions, but are now collectively referred to as the BNB Chain.
The BNB Chain and the BNB’s token evolution came into existence with the launch of the Binance centralized exchange back in 2017, by Changpeng Zhao, the founder, and CEO of Binance.
The BNB Beacon chain was the first to launch in 2019, with the spotlight being on trading. The Binance DEX is in fact its biggest DApp on the blockchain. BNB network is where governance, staking, and voting takes place.
Subsequently, the BNB Smart Chain was launched in 2020, following what is now known as the ‘DeFi summer’.
Of the two, BSC was built with smart contract functionality in mind and is compatible with the Ethereum Virtual Machine (EVM), which converts smart contracts into computer-friendly instructions. The ease of transition of Ethereum tools and DApps towards BSC, was right from the start intended to facilitate developer migration from the Ethereum blockchain to BSC.
The Binance Smart Chain (BSC)
BSC is a Proof of Staked Authority (PoSA) consensus model, which is a hybrid between Proof of Authority (POA) and Delegated Proof of Stake (DPOS). When compared to the Ethereum blockchain, which is the biggest smart contract blockchain in use by market cap, this model is faster and cheaper. It takes around 3 seconds to complete a transaction, which is roughly 7 – 12 seconds faster than Ethereum transactions.
The much lower-cost transactions and EVM compatibility, make BSC a substantial L-1 competitor, which some belief is a big reason for the chain’s success.
BSC supports the Metamask wallet which is one of the most popular wallets out there, and once the BSC network is added, users have access to all the DApps built on the chain. All network activity is accessible to the public on the blockchain explorer called BscScan.
Despite this ease of adaptability, one of the criticisms aimed at BSC concerns the fact that most of the top validators keeping the chain operating are owned by Binance, making it a rather centralized system, and by default vulnerable to system failures, hacks, and regulation. However, increased decentralization is on the horizon with plans to increase the current 21 validators, to 41.
BNB: Native Coin
Although BSC and BNB are separate, the dual-chain architecture allows interoperability between the two chains, exposing users to the benefits of the entire ecosystem. BNB, previously known as “Binance Coin” has been renamed to “Build and Build” and can be found in three forms: BEP-2 on the BNB Beacon Chain, BEP-20 on the BNB Smart Chain, and ERC-20 on the Ethereum network.
The Binance Chain wallet can be used to move the tokens from one chain to another.
The coin reached an all-time high of $686.31, in May 2021 and as of July 2022, BNB is the fifth largest cryptocurrency by market cap. Holders benefit from reduced trading fees on the Binance exchange and can use it to pay for transaction fees on both chains, goods purchased through the Binance card, and participation in token sales launched on the Binance Launchpad, amongst many other things.
Initially, 200 million BNB coins were made available but this number decreases due to a periodic burning mechanism, which will continue until 100 million coins are destroyed.
Ecosystem & 2022 Roadmap
BSC has a massive ecosystem with various wallets, DeFi, tooling, and gaming built on it. The DeFi sector includes exchanges, NFT, stablecoins, yield farming, oracles, aggregators, and more, which serve over 120 million users globally. With roughly 170k users, PancakeSwap is one of the most popular DApps on the chain.
In Zhao’s own words, “In the past year alone, BNB Chain has recorded over 2.4 billion transactions and hosted over 1200 projects. It is the most active layer-1 network, with a thriving life and ecosystem of its own.”
In an attempt to overcome scalability issues, the BSC community is encouraging the building of BNB sidechains, which will permit higher throughput and lower gas fees. The platform is also growing in the direction of NFTs, gaming, and the metaverse, by cultivating and funding new projects.
In fact, Binance is investing $1 billion to help grow the ecosystem of DApps.
According to an article published by Messari, in June 2022, “BNB Chain has outperformed across several financial, network, ecosystem, and development metrics YTD”, when compared to the top 5 EVM compatible L-1s, by total value locked and a number of protocols on the chain.
For example, when compared to Ethereum which experienced a 69% decline in network value and TVL, BNB chain only lost around 60%, which is rather remarkable.
2022 plans were made public during the BNB Chain Revelation Summit, and the BNB chain tech roadmap 2022 includes updates and improvements related to faster transactions, lower costs, extra capacity, further decentralization, sidechains, and increased transaction speeds amongst others. The main focus will be on the BNB Chain infrastructure improvement and user experience.