Academy Icon

Academy

Altcoin

What Is BNB Chain?

Mar 30, 2023
5m
Conor Walsh Francesco Maddalena

BNB Chain is the latest version of Binance’s proprietary blockchain. Released in February 2022, it was built by combining Binance’s two previous blockchains: Smart Chain and Binance Chain. This created a single, unified ecosystem of multiple blockchains that are connected to Binance’s native coin, Binance Coin.

If you’re confused, you’re not the only one. To clear everything up, we’ve read every press release, research paper, and statement from the exchange explaining BNB Chain. This quick guide – the result of our work – will finally explain everything you need to know about BNB Chain and what it does. 

Quick Facts About BNB Chain

  • BNB Chain was released by Binance in February 2022. 
  • It’s a complete blockchain ecosystem made up of BNB Beacon Chain (previously known as Binance Chain) and BNBSmart Chain (BSC) (previously known as Binance Smart Chain). It is compatible with Ethereum Virtual Machine. 
  • By October 2022, BNB Chain was the second-largest smart contract blockchain, based on transaction volume and daily active users. Ethereum remains #1. 
  • BNB Chain has facilitated the development of over 1,300 dApps in its ecosystem.
  • BNB Chain is independent of Binance’s exchange. However, the company heavily governs the ecosystem, leading to considerable criticism about it being over-centralized. 

What Is BNB Chain?

BNB Chain is a blockchain ecosystem released by crypto exchange Binance in February 2022. BNB stands for “Build and Build”, reflecting the company’s intention for BNB Chain to become the biggest blockchain ecosystem for building decentralized apps, programs, communities, and much more.

Simply put, BNB Chain is simultaneously a rebrand and a merger of two proprietary blockchains built by Binance and its native token: 

  • Binance Chain (now called BNB Beacon Chain) 
  • Binance Smart Chain (now called BNB Smart Chain [BSC]) 
  • BNB token

Here’s a quick breakdown of what actually makes up BNB Chain and what purpose each element serves within the ecosystem: 

Name

Function

Explanation

BNB Beacon Chain (prev. Binance Chain)

Governance

Manages functions and activities such as staking and voting on the ecosystem.

BNB Smart Chain (BSC) (prev. Binance Smart Chain)

DeFi and dApp development

Building decentralized apps and products and managing compatibility with Ethereum and other blockchains. 

BNB Token

The native coin for BNB Beacon Chain and BSC

Fueling transactions and verification on both chains; ownership of BNB token is required to engage in governance of the ecosystems; online payments

What Is BNB Beacon Chain?

Previously called Binance Chain, BNB Beacon Chain is responsible for governance within BNB Chain. It’s used to manage activities that impact the broader ecosystem, as well as its future direction including:

  • Voting 
  • Staking 
  • Trading fee benefits on Binance’s exchange 

The Binance Chain was the original version of BNB Beacon Chain. When it launched in April 2019, its goal was to facilitate fast, decentralized trading on Binance. Now incorporated into BNB Chain, BNB Beacon Chain continues to serve its governance function within BNB Chain’s ecosystem. That said, it’s also independent of the Binance Smart Chain and BNB Token that it works alongside. 

What Is BNB Smart Chain (BSC)?

In September 2020, Binance launched the original version of BNB Smart Chain (BSC) to create an environment for decentralized app (dApp) development and smart contracts within its exchange. 

Binance built BSC to be independent of, but compatible with, BNB Beacon Chain. This ensures smooth developments and transactions within the ecosystem – without creating a single point of failure. For example, if BSC fails or shuts down for some reason, BNB Beacon Chain will continue to operate. 

BSC is also compatible with Ethereum Virtual Machine, a development environment for building dApps and similar decentralized projects on Ethereum. This cross-compatibility further strengthens BSC by making it more scalable and sustainable. 

What Is BNB Token? 

BNB Token is Binance’s native cryptocurrency that’s used to fuel the BNB Chain ecosystem. You can use BNB Token for numerous uses outside BNB Chain, including:

  • Paying transaction fees on Binance’s exchange
  • Making purchases on Decentraland and other metaverses
  • Paying for goods and services on many crypto-friendly platforms and websites

While these activities are not directly tied to BNB Chain (Decentraland, for example, is a metaverse built on Ethereum’s blockchain), BNB Token relies on BNB Chain to work. Every transaction that occurs using BNB Token is recorded on the blockchain.

The BNB Token also predates BNB Chain but was merged into the ecosystem when it launched. BNB Tokens were released in an Initial Coin Offering in 2017. The total supply was 200 million at the time, but this has decreased as Binance regularly “burns” coins.   

How to use BNB Chain

By late 2022, BNB Chain was the largest blockchain in the world, based on daily active users. It has been used to build over 1,300 decentralized apps, and BNB Token is now accepted as payment for various uses. 

Here are the most popular ways to use BNB Chain in 2023: 

  • Decentralized finance (DeFi): BNB Chain is currently powering DeFi apps and protocols worldwide, including staking, lending, trading, and many more uses. 
  • NTFs: You can use BNB Chain to mint NFTs, which can be traded on most NFT marketplaces, including OpenSea.
  • Gaming (GameFi): Decentralized games with tens of thousands of players have been built on BNB Chain, including esports, various metaverses, and RPGs.  
  • Binance Transaction Fees: Binance customers can pay their trading fees using BNB Token at a discounted rate. 
  • Payments: BNB Token is accepted on numerous shopping, travel, entertainment, and e-commerce platforms. You can also use it on decentralized freelance marketplaces like Canya
  • Finance: You can use BNB Token on certain crypto-finance platforms to trade stocks, apply for loans, purchase investments, and much more.
  • Staking: You can stake your BNB token to accumulate passive rewards (ie. additional tokens), which can be reinvested or cashed out as income. 

The Goals of BNB Chain

By combining and renaming these blockchains (including removing “Binance'' from their titles), Binance is moving away from just being one of the world’s biggest cryptocurrency exchanges. It’s developing BNB Chain independently of its exchange – as an entirely separate entity. 

Binance’s founder, Changpeng Zhao, believes BNB Chain will one day “go beyond Binance” and become a much bigger, more impactful, “all-encompassing” ecosystem with zero association with the crypto exchange. In theory, BNB Chain will eventually rival Ethereum as the most popular ecosystem for blockchain development. 

To achieve this goal, Binance built BNB Smart Chain with the following considerations:

  • Eventually achieve a high industry standard of decentralization. Complete decentralization may never be possible for BNB.
  • Facilitate large-scale applications in DeFi, GameFi, SocialFi, and metaverse environments.
  • On-chain governance shared between all users across the BNB Chain community.
  • Compatibility with other blockchain ecosystems.

While BNB Chain has been criticized for being too centralized, it’s quickly become one of the most popular and widely-used blockchains in the world. Binance continues to invest huge sums into the project (over $1 billion as of early 2023) and, as it grows, true decentralization is becoming more likely. 

Finally, Binance claims BNB Chain has already achieved greater decentralization than Ethereum. 

Advantages of BNB Chain

  • Low fees - Fees on BNB Chain cost, on average, 0.1%. 
  • Fast transactions - By separating its governance and development functions, BNB Chain is faster than other blockchains that run every function simultaneously on the same chain. 
  • Permissionless - BNB Chain is open-sourced and anonymous. Anyone who owns BNB tokens can participate. 
  • Multichain compatibility - You can use BNB Chain with Ethereum’s Virtual Machine developer environment (and others). 
  • Not reliant on Binance's exchange - Anyone can use BNB Chain, whether you’re a Binance customer or not. 

Disadvantages of BNB Chain

  • Potential centralization - As BNB Chain has very few independent validators – and is backed by one of the biggest international CEXs – it’s far more vulnerable to centralization than Ethereum or Bitcoin. 
  • Dependent on Binance investment - As Binance is BNB Chain’s biggest backer, if the company ever collapses, BNB Chain’s future could also be at stake. 
  • Reliance on Ethereum developers - Many of BNB Chain’s innovations occur first or simultaneously on Ethereum. Eventually, they may not be transferred over, and BNB Chain will need to start developing in-house more. 
  • Energy consumption - Like every blockchain, BNB Chain uses a massive amount of energy, and neither the community nor Binance has found a solution yet.  
  • Security - In October 2022, BNB Chain was successfully hacked, and $100m worth of funds were stolen – raising concerns about the ecosystem's security. 

Recent Developments in BNB Chain

Since its launch in early 2022, the BNB Chain community (with the support of Binance) has made significant upgrades and technical changes to the ecosystem. Aside from improving overall performance, scalability, and security, these changes have also improved its decentralization. 

Some significant highlights have included: 

  • By December 2022, BNB Chain had over 236,000 unique addresses on its blockchain, almost double from one year previously.  
  • BNB Chain supports 1,300+ dApps across multiple categories (as of January 2023). 
  • In January 2023, BNB Chain launched an in-house job board to help dApp founders connect with potential employees.  

What’s Next for BNB Chain?

Despite the crypto turmoil of 2022, BNB Chain is growing, updating, and attracting developers. 

Backed by Binance, the BNB Chain community continues to reinvest towards its ultimate goal: becoming the #1 ecosystem for decentralized developers, gamers, communities, financial institutions, and any other virtual project. 

Some upcoming highlights include:  

  • Large-scale application: BNB Chain continues to grow and invest in supporting more projects and developers.  
  • Scaling from one chain to multi-chain: This will make developing apps on BNB Chain much faster, reduce transaction fees to almost zero, and much more. 
  • Governing mechanisms: As it becomes more decentralized, BNB continues to implement and enforce on-chain governance, making it more secure from hacks.

Conclusion

Binance’s consolidation of its numerous blockchains and ecosystems into a single entity has ensured BNB Chain’s rapid growth. 

Like all new technologies – especially in crypto – BNB Chain isn’t perfect. Anyone planning on developing, trading, building a community, or undertaking any actions in the ecosystem needs to weigh the benefits and the risks objectively. 

Before going any further, take a minute and learn how to spot common crypto scams.

Private Sale Open ✨ ——— Join Now 🚀 ———

Watchlist
Save tokens you want to track over time
Beta Version: 0.5.1