What is BNB?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 5 min
In short
BNB was issued in 2017 by the crypto exchange Binance, originally as an ERC-20 token on Ethereum. It is now the native asset of BNB Chain, used both for fee discounts on the exchange and for gas on the chain. Its tight link to a single company sets it apart from other public-chain assets.
Key points
- Started as a utility token giving fee discounts on the Binance exchange
- Now pays gas on the EVM-compatible BNB Smart Chain
- A recurring burn mechanism destroys tokens over time
- Both the issuer and the main venue of use are concentrated in one company
Definition
A token issued by Binance, used to pay gas on BNB Chain and fees on the Binance exchange.
BNB's first job was simple: pay trading fees with it and get a discount. It was distributed through a 2017 token sale and at that point was just an ERC-20 token on Ethereum, with no chain of its own.
It moved to Binance Chain in 2019, followed by Binance Smart Chain — now BNB Smart Chain — which runs smart contracts. The chain is EVM-compatible, so contracts written for Ethereum run on it with little change. Consensus is Proof of Staked Authority, where a small elected validator set produces blocks. Keeping that set small keeps fees and confirmation times down, at the cost of limited decentralisation.
Day to day, BNB pays exchange fees, gas for BNB Chain exchanges and lending protocols, and transaction costs in games and NFT apps. Cheap fees have made it popular for frequent small transfers and among users in emerging markets. Binance also runs a recurring burn that permanently removes tokens, and publishes both the mechanism and the results.
The key structural point is that BNB's usefulness is tied to Binance as a business. In 2023 Binance reached a settlement with US authorities over anti-money-laundering failures, and its chief executive pleaded guilty and stepped down. Regulatory events of that kind can affect how the chain and the token are treated.
Watch out for
- · A single company is the issuer, so its business and regulatory problems pass straight through to the token
- · The validator set is small, so decentralisation is limited for a public chain
- · Cheap fees also attract copycat and fraudulent tokens, so verify contract addresses
Frequently asked questions
Is BNB only useful if I use Binance?
No — you need it for gas when using apps on BNB Chain, regardless of the exchange. That said, a large share of demand is exchange-related.