*obligatory not financial advice*
Binance and its BNB Token
Binance is the biggest cryptocurrency exchange and probably the biggest crypto company worldwide. Its exchange supports almost every coin or token you can think of and has many features that let the users earn a decent yield like locked and flexible savings and staking, a Launchpad, ETH2.0 staking and many more. The platform has also supported many different crypto projects and helped to shape the entire market to what it is now.
BNB is the native exchange token of Binance. It was initially launched as an ERC-20 token on Ethereum but migrated to its own chain long ago. It rewards users with lower fees and also offers them different ways of earning more crypto. Today I want to take a closer look at the token and what it all can do.
Lower Fees on Binance
The first few years after the launch of Binance you could use BNB to pay for trading fees and get a discount of up to 25%. This is only available for the first 4 years of the platform and the discount is lowered every year until it becomes zero in 5th year. At least that was the initial plan, now it’s the 5th year since Binance launched and they choose to prolong the discount for one more year, maybe they will prolong it again.
BNB can be staked to earn a decent APY. You can stake it directly on Binance which requires you to lock your funds for 30 days, 60 days or 90 days. The APY is fixed and depends on how long you lock your funds, and it is between roughly 6% and 9%. You can also move your BNB to a non-custodian wallet like Trust Wallet and stake your BNB yourself, this doesn't require you to lock up your funds and can give you a variable APY of up to 20%, but there is a risk of slashing if your chosen validator misbehaves.
Launchpad & Launchpool
The token can be used to participate in ICOs and IDOs on Binance. The Launchpad lets Binance users buy new tokens and coins, before they are offered to the open market for a fixed price, with BNB tokens. The amount you can buy depends on how much liquid BNB you have held on your account before the sale and on how much BNB is in total used in the sale. Usually the price of the new token goes up after it hits the open market, so it’s usually profitable in the short term.
The Launchpool lets users earn a token, of a project that is being promoted by Binance, simply by staking their BNB, BUSD and a third variable token depending on the project, on the launchpool. You don't have to spent any tokens and can unstake them anytime and keep your rewards, there is no risk here. If you hold BNB in the BNB Vault you automatically earn all launchpool rewards that are currently available.
BNB has a max supply of 200,000,000 and no new tokens are created. Binance is using some of their profits to buy and burn BNB tokens every quarter to reward their users and BNB holders. The amount of burned tokens per quarter depends on the trading value on Binance but it will continue until the entire supply is cut in half. Currently about 32,000,000 tokens are burned, which means 78,000,000 more will be burned.
Binance Smart Chain
The Binance Smart Chain is a smart contract platform that is using BNB as gas, so BNB is also a competitor for ETH although a very centralized one. You can build dApps there and it has a very big ecosystem of different applications like Pancakeswap or Venus and some Ethereum apps like Aave or 1inch have also launched there. The blockchain is also home of many shitcoins and scams like Safemoon, which is bad but it shows that the blockchain is easy and cheap to use.
The Smart Chain keeps growing and will likely continue to do so because of how fast and cheap it is, so it will offer plenty of ways of earning money and using BNB. However, the blockchain obviously depends on Binance and is not decentralized at all.
BNB is a centralized cryptocurrency that is used by Binance as utility token and to reward their users. It is currently deflationary and has many use cases that give their holders opportunities to make more money. Its centralization is a huge risk factor because Binance has pretty much all control over it. However, due to its connection to Binance it will likely keep rising value if the platform performs well. Binance is currently the biggest centralized exchange and will likely not go bankrupt anytime soon, so BNB should do well in the next few years.
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