Binance Coin, abbreviated as BNB, is a digital asset token issued by Binance and is based on the decentralized blockchain of Ethereum. Its total supply is fixed at 200 million tokens, with a quarter of these being destroyed each quarter according to Binances trading volume for that period. Destruction records are promptly disclosed, and users can verify them via a blockchain explorer, ensuring transparency until the total number of BNB tokens reaches 100 million.

BNB serves as the fuel for the Binance ecosystem and its decentralized exchange, finding use in various applications such as receiving up to a 50% discount on Binance trading fees when used to pay them, making payments through Monaco Visa and its app, and purchasing virtual gifts on the Uplive streaming platform. Currently, BNB consistently ranks among the top 20 global cryptocurrencies, reaching as high as the top 10, supported by blockchain enthusiasts from over 180 countries and regions worldwide.

Binance and BNB

Binance is a centralized cryptocurrency exchange established on July 14, 2017. Within six months, it rapidly rose to become one of the leading exchanges, consistently ranking among the top three globally by trading volume. The founder, Changpeng Zhao, became the true Bitcoin billionaire, surpassing Li Xiaolai in authenticity.

BNB, Binances native token, has a total supply of 200 million tokens. Each quarter, 20% of Binances profits are used to buy back BNB, which is then destroyed until the total supply reaches 100 million tokens. This buyback mechanism causes deflation, theoretically increasing the tokens price under the assumption of constant total value. To date, eight buybacks have been completed, with the most recent in July 2019.

In terms of USD/USDT pricing, BNB reached its highest price of $23 during the 2018 bull market. As of March 1, 2019, its price was around $11, representing a halving in the bear market. Compared to the price fluctuations of Bitcoin and Ethereum over the past year, this decline is relatively minor. Moreover, BNB experienced a two-fold increase in price within two months during the bear market, an impressive feat for an established token.

Allocation Ratio

1. A total of 100 million BNB were publicly sold in the ICO, representing 50% of the total issuance, distributed across three platforms: Binances official website, RenRenICO, and Binances old site.

2. The founding team initially held 80 million BNB, constituting 40% of the total issuance.

3. Prominent industry insiders held 20 million BNB after angel financing, accounting for 10% of the total issuance.

Value and Buyback Mechanism

1. Discounted Trading Fees on the Binance Platform

Users participating in trades on the Binance platform can receive a discount on trading fees if they hold sufficient BNB. The system applies discounts (at rates specified below) to the fees due and uses the equivalent value of BNB, based on its market value, to cover the fees.

The discount rates are 50%, 25%, 12.5%, 6.75%, and no discount.

2. Buyback Mechanism:

Following the launch of the Binance platform, 20% of Binances quarterly profits will be used to buy back BNB, which will be destroyed. The buyback records will be promptly disclosed, and users can verify them via a blockchain explorer, ensuring transparency until the total supply reaches 100 million BNB.

3. Fuel for Decentralized Trading

BNB is the fuel for Binances decentralized exchange, used for various functions including fee deductions and rewards.

Why Does BNB Rise?

The rise of BNB is primarily associated with three factors: the cryptocurrency issuance platform, public blockchain, and decentralized exchange.

Binance Launchpad: Binances Version of Ethereum

Binance Launchpad is Binances blockchain asset issuance platform, essentially an ICO platform where projects raise funds in BNB instead of ETH. Binance Launchpad aims to introduce at least one new token per month in 2019.

To date, two projects have been launched on Binance Launchpad: BitTorrent (BTT) and Fetch.AI (FET). Due to Chinas ban on ICOs, Binance Launchpad is not available to mainland Chinese users. Many individuals purchase foreign KYC (Know Your Customer) documents to participate in the offerings, facing significant challenges in securing allocations. Those who manage to secure allocations have seen substantial returns, with BTT becoming a tenfold gain in the bear market, boosting investor morale.

Binance is more than just an exchange; it has evolved into a blockchain ecosystem. From investment and incubation through Binance Labs, private sales on Launchpad, and eventual listing on the Binance exchange, it offers a complete service package.

Binance Chain: The First Public Blockchain for Platform Tokens

2018 was hailed as the year of public blockchains, with numerous mainnets launching, including EOS, TRX, and AE. However, post-launch, their prices plummeted to new lows. Last year, major exchanges like Binance, Huobi, and OKEx announced plans to enter the public blockchain space. Binances current focus for its blockchain is mainly for its decentralized exchange. Recently, the testnet for Binance Chain went live, presenting a positive development regardless of its future applications.

Imagine if some quality projects chose to issue tokens on Binance Chain rather than on mainstream options like ETH or EOS, combined with Binance Launchpads private sales and the support of Binances user base. Could it compete with Ethereum?

Binance DEX: Decentralized Exchange

He Yi and Changpeng Zhao have repeatedly discussed ideas about decentralized exchanges, with Zhao announcing news related to Binance DEX as early as August last year.

Binance DEX, a decentralized exchange, has been launched. Leveraging the technological advantages of Binance Chain, it can handle the same trading volumes as Binance, solving the speed and performance issues faced by decentralized trading platforms.

Why would a centralized exchange like Binance "compete against itself"? Currently, decentralized exchanges (DEXs) have yet to gain significant traction, whether built on ETH or EOS, their trading volumes pale in comparison to centralized exchanges. As the leader among centralized exchanges, Binance can leverage its massive user base to drive the growth of its own DEX. Since BNB serves as the "gas" for Binance DEX, if the DEX thrives, the value of BNB will also increase. Binance plans to achieve coexistence between centralized and decentralized exchanges, which will be a critical component of the entire Binance ecosystem.