BNB Chain, since its launch in 2020, has rapidly become one of the most widely used smart contract platforms. This is especially true in the decentralized finance market (DeFi).
Contents:
- What is the BNB Network and its Key Statistics
- The Evolution of Binance
- The BNB Token and BNB Ecosystem
- Goals of BNB
- The Need for MetaFi
- How to Use BNB. Transaction Fees and More
- Pros and Cons of BNB Chain
- Main Decentralized Applications
- The Future of the BNB Network
Cryptocurrency exchange Binance announced the split of Binance Smart Chain and Binance Chain to create the BNB Chain. The relaunch of Binance's layer-1 or foundational blockchain is part of a plan to link it with the protocol's governance token — BNB — to expand and develop decentralization.
As of today, Binance has invested over $1 billion in the BSC ecosystem to support its ongoing and intensifying competition with the Ethereum network and other first-tier blockchains. These efforts hope to mitigate criticism about BSC's excessive centralization.
Binance plans to position BNB as the token for the BSC ecosystem, serving several sectors, including GameFi and the non-fungible token (NFT) industry. This should help make BNB essential for the potential development of what Binance calls "MetaFi".
What is the BNB Chain Blockchain and its Key Statistics
According to Binance CEO Changpeng Zhao, "BNB" stands for "Build 'N Build". In his tweet, Zhao shared that "BNB means 'Build the community, and let the community build, build, and build'."
The recently released BNB Chain includes the BNB Beacon Chain for managing BNB Chain (i.e., staking and voting) and BNB Smart Chain, which remains compatible with the Ethereum Virtual Machine.
The BNB Network aims to enhance functional compatibility and develop the underlying infrastructure of a "world parallel virtual environment", a step forward in Binance's recent efforts to utilize MetaFi.
Using charts from Binance's official explorer BscScan, it's clear that daily transactions on the BNB Chain peaked in December 2021 and have since significantly decreased. On June 14, 2022, 4.5 million transactions were registered. While this figure is lower than the 2021 peak, it is slightly higher year-on-year: on June 14, 2021, the BNB Chain registered 4.38 million transactions.
Since March 2021, the number of unique network addresses has been steadily increasing, and currently, it exceeds 134 million. Since August 2021, average gas prices have consistently remained below seven Gwei (seven billionths of 1 ETH), which is a fraction of a cent in fiat terms.
The average block time has also remained constant at three seconds, except for a brief spike in May 2021, likely due to the strong rise in cryptocurrency.
The Evolution of Binance
Binance and BNB were created in 2017, with BSC following three years later. As Binance's popularity grew, so did BSC. BSC was formed around the same time the DeFi movement began. Over time, as public interest in alternative financial solutions grew, so too did the number of blockchain technology use cases.
According to Binance, the BNB token has constantly evolved since its debut. Initially, it was created as an ERC-20 token on the Ethereum network in 2017. By 2019, it had switched to the Binance Chain and helped create the BSC network, officially launched in September 2020. This move is part of the crypto giant's effort to go beyond Binance. BNB is now a token for the BNB Chain.
The BNB Token and BNB Ecosystem
The BNB token, formerly known as "Binance Coin", now stands for "Build and Build". BNB is the cryptocurrency powering the BNB Chain ecosystem. It also serves as a governance token, in addition to paying for transactions on the BNB Chain, similar to gas in Ethereum.
Owning BNB is required for participating in the decentralized governance of the BNB Chain. Along with the rebranding, additional improvements to BNB were announced, including technical upgrades for further decentralization development. Such improvements are expected to benefit users, developers, and community projects.
Here are some of the updates announced by Binance:
- Creation of automatic BNB burning, a new protocol that is both verifiable and objective;
- Version 1.1.5. Bruno hard fork update, which increased the speed of BNB burning.
You can trade BNB like any other cryptocurrency, as well as use it in various dapps or to reduce trading fees on the Binance exchange, pay for transaction fees made through the BNB network, and purchase goods and services online and in-store.
The dual-network architecture of the BNB Chain ecosystem facilitates interaction through its native token BNB, which supports BEP-20 and BEP-2 token standards. But what distinguishes one from the other?
BEP-2 is the token standard for BNB Beacon Chain, while BEP-20 regulates BSC tokens. The BEP-20 token standard is often compared to the Ethereum ERC-20 token, as they are very similar in many aspects.
BNB Goals
After the renaming of BSC, some improvements became available to users, project owners, and developers associated with the BNB Chain community. Large-scale applications such as Metaverse, GameFi, SocialFi, and others, were soon connected to the BNB network.
Key improvements made to the BNB Chain blockchain:
| № | Goal |
|---|---|
| 1 | Scaling from a single chain to multiple chains |
| 2 | Increasing BSC throughput |
| 3 | Implementation of network governance mechanisms |
| 4 | Improving scalable solutions and expanding the set of BSC validators from 21 to 41 (with 20 validators functioning as block producer candidates) |
First and foremost, BNB Chain remains a community-managed, open, and decentralized ecosystem. Support from the community of users, developers, validators, and delegators is vital for its health. As BNB Chain receives significant technical updates, it's time for the community to transition to MetaFi.
What is MetaFi For
MetaFi represents a blend of two words: “Meta” for meta-ecosystem and “Fi” for DeFi. This concept combines all different types of projects, such as Metaverse, DeFi, GameFi, SocialFi, Web3, and NFT, and unites them under one umbrella — MetaFi.
This is possible thanks to metadata defining ownership rights over assets. MetaFi will allow for the integration of a wide range of blockchain functions into one meta-ecosystem, and it will be functionally compatible thanks to specific metadata standards used across various platforms and blockchains.
MetaFi may include DeFi products or a combination of fungible and non-fungible tokens or assets combined with community governance, such as decentralized autonomous organizations (DAOs).
The goal of this ecosystem is to create and develop new ecosystems filled with various functions based on digital assets, which contribute to the mass adoption of the metaverse, as well as provide users and players with new use cases. The combination of these different blockchain projects allows for the creation of a comprehensive parallel ecosystem serving users around the world.
Following the MetaFi slogan “Think BNB Chain, think MetaFi”, the BSC blockchain aims to facilitate innovations for MetaFi through the development of robust and compatible projects with the potential to use multiple networks and bridges to help with the huge volume of assets and data transfer. With the BNB Chain network, the community of creators, developers, and entrepreneurs can create infrastructure that allows the parallel virtual ecosystem of the world to function seamlessly.
How to Use BNB. Transaction Fees and More
BNB is widely used to pay for transaction fees. According to Binance, about 2 million users have used BNB to pay for trading fees totaling more than 40 million BNB across over 127 billion transactions on the Binance trading platform alone.
Paying standard trading fees on Binance Exchange with BNB allows users to receive a special discount. Currently, each transaction made on the exchange is subject to a fee of 0.1%, which is paid using the traded assets or BNB. Furthermore, traders who mainly rely on Binance are advised to buy BNB to save on transaction fees.
To pay fees in BNB on Binance Exchange, follow these steps:
- Go to your profile;
- Access the dashboard;
- Navigate to your trading fee tier;
- Enable the button labeled “Use BNB to pay for fees (25% discount)”.
You can also use BNB outside of the Binance trading platform, as the cryptocurrency powers Binance DEX on Binance Beacon Chain and various applications operating on BNB Smart Chain.
Here are other ways to use BNB in the Binance ecosystem:
- Pay for goods and services online and in-store using Binance Card or Binance Pay;
- Participate in Binance Launchpad token sales;
- Donate to Binance charity;
- Provide liquidity on Binance Liquid Swap.
Payments
Users can use BNB to pay for goods, purchase virtual gifts, and much more. Integrations listed on the BNB page include Pundi X, CoinGate, Monetha, and others.
Travel
You can use BNB to pay for airline tickets, hotel bookings, and other travel services through TravelbyBit, Trip.io, and Travala.com.
Entertainment
Users can use BNB on several integrated platforms, such as VIBE, which allows them to earn BNB in games. They can also use the cryptocurrency to buy music copyrights through MachiX or virtual land on Axie Infinity (AXS).
Services
This cryptocurrency also has many other practical applications, including hiring freelancers, creating smart contracts, accessing torrents, and paying for cloud or web server subscriptions.
Finance
BNB is also useful for obtaining loans, trading stocks, buying investments, and splitting bills and expenses with others through financial applications such as ETHLend, NAGA, Moeda, LNDR, and Nexo.
Pros and Cons of BNB Chain
No application is perfect, even the BNB Chain blockchain. While it offers low transaction fees, fast integration, bridge functionality, adequate funding, and localization, some are concerned about the chain being centralized, having complex and resource-intensive node operation and verification processes, and that relevant innovations occur in Ethereum rather than its own environment.
Major Decentralized Applications
Fulfilling Binance's intention to create a robust platform for DeFi, the BNB Chain is home to some of the biggest projects, primarily PancakeSwap, whose total value locked (TVL) exceeds 3 billion dollars.
The TVL of all DeFi decentralized applications on the BNB network is 6.26 billion dollars. In addition to PancakeSwap, major players include:
- Venus with 644.03 million dollars in TVL;
- Tranchess with 152.42 million dollars in TVL;
- Alpaca Finance with 437.6 million dollars in TVL;
- Ellipsis Finance with a TVL of 104.25 million dollars.
In February 2022, the Terra blockchain surpassed the BNB chain (14.6 billion dollars in TVL) before collapsing a few months later. BNB Chain's indicator is only 6.1% of the market leader Ethereum's TVL of 49.05 billion dollars, supported by major players like MakerDAO, Curve, Convex Finance, Wrapped Bitcoin, Aave, Compound, and Uniswap.
One of many notable exploits in 2021, Meerkat Finance became an example of widespread hacking recently seen in the decentralized finance (DeFi) space, resulting in the draining of "yield farms" liquidity by attackers. In Meerkat's case - 31 million dollars was stolen in an apparent contract reliability test.
Yield farms operate by staking user tokens and accordingly earning interest. "Yield farming is risky," reports Business Insider, which identified volatility, fraud, manipulation, irreversible losses, and regulatory risks as the main issues.
The origin of Meerkat Finance shows that it was initially created on Ethereum and subsequently deployed in the BNB chain.
In the Unchained podcast, Sami Karim, ecosystem coordinator at BNB Chain, said: there definitely have been a lot of exploits, but this is not unique to BNB Chain.
The Future of the BNB Network
In addition to increased attention to MetaFi, the BNB Chain network has also announced a couple of technological advancements planned for the remainder of 2022, including the introduction of BSC sidechain applications and new BSC segments.
A tweet from the BNB network "The future is decentralized" illustrates the difference between Web2 and Web3 and what Web3 means for its advancement forward.
