Crypto Academy Week 9 - Homework Post for @yohan2on | Binance Coin

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INTRODUCTION

Binance, mostly known as one of the leading centralized crypto exchanges in the world today, features more than just crypto exchanging. It is actually a vast ecosystem comprising a launchpad, a launchpool, a decentralized exchange, a development lab, a charity foundation, and project researching. These are all platforms and they're powered by binance native token - binance coin (BNB).

WHAT IS BINANCE COIN (BNB)

Binance coin (BNB) is the native coin of both chains in the binance ecosystem. Recall that binance represents a vast ecosystem and as such, has various needs for a native coin.

Binance runs a dual-chain in its ecosystem. This means that it has 2 blockchains in its ecosystem running parallel to each other. These blockchains are:

Binance Chain:

This is the blockchain where transactions are processed. You can consider it as a 'bitcoin-like' blockchain. It uses the Delegated Proof of Stake consensus mechanism.

Binance Smart Chain (BSC):

This is a programmable blockchain on which developers can build decentralized applications and protocols. It's compatible with Ethereum Virtual Machine (EVM). You can consider it as an 'ethereum-like' blockchain without the usual ethereum network congestion or high gas fees. Instead of these, binance smart chain offers a convenient alternative.

With its dual-chain structure, binance seeks to offer programmability and smart contracts features together with fast transactions and a less congested network. The power behind all these is the BNB token.

BINANCE COIN (BNB) UTILITY

Across both binance chains and exchanges, and on the various binance platforms, BNB has the following uses:

PAYMENT OF TRADING FEES

On both binance centralized exchange and binance DEX, BNB is used to offset trading fees. If the trader has some balance of BNB left in their wallet, trading fees, no matter the pair traded, is usually deducted from this BNB balance.

Fair enough, this accrues discount on the fees. For binance centralized exchange, the discount amount depends on the time interval between when the fee is charged and when binance was launched (2017).

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It's worthy of note that this can be prevented by the user buy simply toggling this feature off in the binance mobile app following the simple steps below.

On the homepage, click the profile icon at the top-left corner.

Then click on fee discount

Then toggle the 'use BNB to pay fees' option on or off. Mine is turned on.

From my screenshot above, you can also see that the current discount rate is 25%

PAYMENT OF TRANSACTION FEES

Just like bitcoin's transaction fees, using the binance chain also incur transaction fees which are paid to the network validators.

The fee structure for transaction fees on binance chain can be gotten here

INVESTING IN ICOs

One of the platforms in binance ecosystem is the binance launchpad. This is where projects are launched. To invest in new project, one uses BNB. ICO simply means Initial Coin Offering.

Another platform, binance launchpool enables users stake their BNB to get new tokens. The new tokens issued as stake rewards are given to stakeholders according to the dictates of the new token.

LIQUIDITY PROVIDING

Decentralized crypto exchanges don't use order books to carry out exchanges, instead they use Automated Market Makers (AMMs). This involves a party providing liquidity (liquidity providers) and another party taking the liquidity provided (taker). The taker pays some fees which are paid to the liquidity providers in proportion to what they provided.

On Binance Liquid Swap, you can lock in BNB in any stable liquidity pool and earn the trio of interests, trading fees and BNB yield farming rewards. However, this can only be done during activity periods and involves some risks.

MAKING PAYMENTS

Apart from the binance ecosystem, BNB token is accepted as a means of making payments for goods and services by a variety of outlets and some platforms like crypto.com and travala.com

BINANCE COIN (BNB) DESIGN

BNB was originally created as an ERC-20 token on the ethereum chain but as time went on, and after binance completed their own chain (binance chain), BNB was transferred from ethereum chain to binance mainnet (the completed and deployed binance chain) in the process, adopting binance chain's token standards, BEP-2.

After binance smart chain was launched, a new token standard was introduced - the BEP-20. This implies that there are currently 3 token standards for the BNB token -

• BEP-2 - for binance chain

• BEP-20 - for binance smart chain

• ERC-20 - for ethereum chain.

Whenever ERC-20 based BNB is transferred to binance, binance converts the ERC-20 based BNB tokens to their mainnet.

BINANCE COIN (BNB) BURNING

According to BNB design, every 4 months, binance uses 20% of their profit to purchase BNB. The BNB purchased is then burned, leading to a bull run in the price of BNB. This practice has helped BNB appreciate significantly in value since it was created.

BNB at its inception was worth just $0.15 but as at the time of writing this post, BNB is worth around $552, thanks to the quarterly burning of BNB.

When binance coin (BNB) was launched, 200 million BNB tokens were issued in the following manner

• Public sale - 100 million BNB (50%)

• Founding team - 80 million BNB (40%)

• Angel investors - 20 million BNB (10%)

The burning event of BNB tokens is scheduled to run untill the total BNB in circulation is reduced to 100 million.

BINANCE COIN (BNB) PURCHASE

BNB can be gotten from exchanges like binance, roqqu, airhawk, etc. It can either be purchased via p2p or with credit cards.

CONCLUSION

Binance coin BNB is a very interesting altcoin. It has a lot of utilities as it is the native coin of the binance ecosystem. It is also a viable investment as it tends to appreciate its value. Being a deflationary coin, it can be held for a long period of time with good chances of value appreciation.

Thanks for reading.

@yohan2on
@kouba01