Launched on July 14th, 2017, Binance is a new cryptocurrency exchange that has been making waves in the cryptosphere, quickly capturing a large portion of the cryptocurrency trading market and earning its title as a household name. The name “Binance” (バイナンス) was derived from the words binary and finance which represents a merger between financial services and technological evolution.
Today, we’re going to talk about the Binance Coin (BNB), a token issued by the aforementioned cryptocurrency exchange, Binance. Through an initial coin offering (ICO), the multi-language exchange launched the BNB token sale, gathering $15 million in the course of 4 weeks. BNB is an ERC-20 based token residing on the Ethereum blockchain with a total supply of 200 million. According to Binance’s whitepaper, the exchange has allocated 20% of its quarterly profits “to buyback and burn BNB,” a practice that sees the BNB token supply decrease over time with the aim of reducing supply while maintaining or increasing demand, thus increasing its underlying value. Here, “buyback” simply means to buy the BNB tokens back from those who purchased them before.
Binance Coin Use Cases
Binance’s official BNB blog post explains that their token has a number of use cases. One of the main use cases for the token is “being the underlying gas” fueling Binance’s ecosystem. Additionally, BNB can be used to pay for transactions on the Binance exchange at a discount. During the first year using BNB, users get a 50% discount on transactions, a 25% discount the second year, a 12.5% discount the third year, a 6.75% discount the fourth year, and no discount after that.
Binance will also launching its own decentralized exchange (DEX) where the company intends to use BNB tokens to power the new crypto trading platform. Reportedly, the Binance management team will not have much control on whether or not a coin gets listed on its new DEX. However, the requirements to list coins or tokens on Binance’s DEX will be the same as those outlined for the company’s centralized exchange.
Binance’s Repurchasing Plan
As mentioned above, Binance’s repurchasing plan entails buying back BNB tokens with 20% of quarterly profits for the purpose of burning them later on. This burning process will end once the exchange has burned half of the maximum token supply (or 100 million BNB tokens).
Binance Coin (BNB) Distribution and ICO Details
Binance’s BNB ICO was launched by accepting Bitcoin (BTC) and Ethereum (ETH) from investors across several trading platforms throughout the world. The whitepaper notes that the Binance Coin ICO started on July 1st, 2017, after the Binance project officially began on June 14th, 2017. Similar to how other crypto platforms launch their ICOs, Binance’s BNB tokens were distributed in three different phases and the goal was to sell 100 million of its native tokens.
Binance’s whitepaper breaks down the allocation of BNB tokens clearly, with half or 100 million of its native tokens being distributed to its ICO participants. Meanwhile, the exchange’s founding members have received 40% or 80 million BNB tokens and the remaining 20 million (or 10%) BNB will go to “angel investors.” These types of investors usually receive ownership equity within a company or convertible debt.
There’s also a “BNB Vested Plan” for the exchange’s founding team members as well in which there will be a starting release of 20% or 16 million BNB tokens to the founders. After which, an additional 16 million BNB tokens will be distributed to the founders every year, for four years.
The usage of funds generated from the sale of BNB tokens has been mentioned in detail in the exchange’s whitepaper. 35% of total funds are to be used to maintain and upgrade the Binance platform. These expenses include paying for staff recruitment costs, training company employees, and the company’s “development budget.”
The majority of funds, or 50%, are to go toward marketing the company’s products and promoting its brand. Included in the promotions will be educating the crypto community about the latest blockchain projects supported by Binance. This is to be done through online advertising campaigns in order to spread awareness about the company’s crypto exchange and bring more clients to Binance. The remaining 15% of funds raised will be held in reserve to deal with emergency situations or “unexpected” events.
Binance Coin (BNB) Integrations and Support
Cryptocurrency visa card provider Monaco began supporting the BNB token back in December, 2017. Asia’s live video streaming platform Uplive supports Binance coin as well by allowing its users to purchase virtual gifts with it. Moreover, the “BNB value & Repurchasing plan” includes encouraging the use of Binance coin to pay for transaction fees and listing charges on the exchange.