In this article, we will go beyond the superficial view of BNB as just a means to pay trading fees on the Binance platform.
While the article will provide an in-depth analysis of the true value of the currency and its pivotal role in the growing Binance ecosystem (BNB Chain and BNB Smart Chain).
In this article, we will cover the main points of this giant currency as follows :-
First: Multifunctionality (Utility): Explain in detail how BNB can be used for trading fee discounts, subscription to new token launches (Launchpad), and as a store of value.
Certainly. Explaining these aspects in detail illustrates the intrinsic value (Utility Value) of BNB, which makes it more than just an ordinary token.
BNB can be used in three main functions that make it a cornerstone in the Binance ecosystem:
1. Using BNB for trading fee discounts
This is the oldest and most well-known function of BNB. Binance introduced this feature to attract early users and as a means to incentivize them to hold the token.
How it works in detail:
• Discount mechanism: Traders can activate the option to pay trading fees (either maker fees or taker fees) using the BNB they hold in their wallets.
• Discount rates:
• In the early years, the discount rate was very high (50% in the first year) and then gradually decreased over time.
• Currently: Users receive a fixed 25% discount on spot and margin trading fees when paying with BNB.
• User benefit: Active traders save significant amounts of money in the long run, making holding BNB a financially smart decision for anyone who regularly uses the Binance platform.
• Platform benefit: The platform ensures continuous demand for BNB and encourages users to hold it rather than sell it immediately.
2. Subscription to new token launches (Binance Launchpad & Launchpool)
This function is considered one of the strongest demand drivers for BNB, allowing users the opportunity to acquire new and promising project tokens before they are listed for trading on the public market.
How it works in detail:
The "Binance Launchpad" and "Launchpool" programs are platforms for launching new projects:
• Launchpad:
• The subscription model based on holding BNB is used.
• Users must hold a certain average minimum amount of BNB in their wallets for a specific period (usually 7 days before the launch).
• Each user's share of the new tokens is determined based on the ratio of BNB they own compared to the total BNB held by all participants.
• Result: Users ensure acquiring tokens at a very low initial launch price, which usually rises significantly when trading begins.
• Launchpool:
• The BNB staking model is used.
• Users stake their BNB in a pool for a certain period to earn rewards in the form of the new token for free. The staked tokens can be withdrawn at any time.
• Result: Users earn passive income in a new token in exchange for storing BNB.
Second: The decentralized economy engine (BNB Chain): So what is the vital role BNB plays as "gas" (Gas Fee) for the BNB Smart Chain, which hosts thousands of decentralized projects (DeFi, NFTs, Gaming)?
The BNB token plays a vital and essential role as "fuel" or "gas" (Gas Fee) for the BNB Smart Chain (BSC). Without BNB, this network cannot function, just as a car cannot run without fuel.
Here’s a detailed explanation of the vital role BNB plays as a gas fee:
1. What are gas fees?
In the blockchain world, "gas" refers to the cost required to successfully execute a transaction or run a smart contract on the blockchain network. These fees are paid to validators who verify the validity of transactions and add them to the blockchain ledger.
2. The role of BNB as fuel for the BNB Smart Chain (BSC)
When someone uses the BNB Smart Chain to perform any activity, they need to pay with BNB for each operation:
• Currency conversion: When you send USDT, CAKE, or any other token from one wallet to another on the BSC network, you pay transfer fees with BNB.
• Interaction with smart contracts: The most complex activities involve interacting with decentralized applications (DApps), such as:
• Decentralized finance (DeFi): When using platforms like PancakeSwap to swap between different tokens or add liquidity (Staking), each click requires paying gas fees with BNB.
• Non-fungible tokens (NFTs): When minting a new NFT artwork or buying or selling it in a marketplace like NFT Marketplace, fees are paid in BNB.
• Gaming: Interaction within blockchain-based games on BSC (such as character upgrades or purchasing in-game items) requires paying gas fees with BNB.
3. Why is this role vital?
The role of BNB as a gas fee is vital for several reasons:
• Ensuring network security: Validators who confirm transactions and maintain network security receive these fees as a reward. This incentivizes them to continue their work honestly and efficiently.
• Network usage regulation (anti-spamming): If transactions are free, users will flood the network with fraudulent or unnecessary transactions. Gas fees ensure that every user has an incentive to be efficient in their use of the network.
• Creating continuous and stable demand for BNB: With thousands of active decentralized projects on the BNB Smart Chain (BSC), there is a daily and massive continuous demand for BNB to be used in paying these operational fees.
Simply put, as long as the BNB Smart Chain is active and hosting thriving DeFi, NFTs, and gaming projects, there will be an ongoing and pressing need for BNB as fuel to run all these activities.
Third: Scarcity mechanisms (Auto-Burn): Explain how the regular "burn" (Auto-Burn) mechanism reduces the total supply of the currency, which may support its price in the long term. This is a point that investors care about a lot.
The "Auto-Burn" mechanism is one of the key features specifically designed to support the market value of BNB over the long term, which is a point of significant interest for investors as it directly relates to the concept of scarcity.
Here’s a detailed explanation of how this mechanism works and its role in supporting price:
1. What is "burning" in the crypto world?
"Burning" is not burning in the physical sense; it is the process of sending a certain number of cryptocurrencies to a "dead wallet" (Dead Wallet or Burn Address), which is a wallet nobody has access keys to.
Once tokens reach this wallet, they become out of circulation forever, permanently reducing the total supply of the currency in the market.
2. The automatic burn mechanism of BNB (BNB Auto-Burn)
Binance tracks the "Auto-Burn" system (BNB Auto-Burn), which is a transparent and verifiable system.
How it works in detail:
• Announced goal: Binance committed to gradually burning 100 million BNB tokens (half of the total maximum supply of 200 million BNB) from circulation.
• The automatic and transparent system: Instead of relying on Binance's profits (as in the past), the current burning system is based on an automatic formula that takes into account:
• Block height on the BNB Smart Chain: Burning is executed based on progress in the blockchain independently.
• Current BNB price: The number of burned tokens is adjusted based on the current price.
• Transparency: Anyone can verify the burn operations that occur approximately every three months by tracking transactions directly on the blockchain.
3. How does burning reduce total supply and support price?
The economic impact of the burn mechanism lies in the basic economic principle of supply and demand:
A. Reducing total supply
The direct result of burning is the continuous decrease in the total number of BNB tokens available in the market. If there are fewer assets available for purchase, the remaining assets become scarcer.
b. Supporting price in the long term (Scarcity and Value Support)
• Increased scarcity: When supply decreases while demand remains constant or increases, the market value of the currency (price) tends to rise. Investors see this "artificial scarcity" as a strong incentive for the currency's value to rise in the future.
• Investment incentive: Investors prefer currencies that contain mechanisms to combat inflation or reduce supply (Deflationary Mechanisms). The automatic burn mechanism gives investors confidence that the value of their relative share of the total remaining tokens will increase over time with each burn operation.
In short, the burn mechanism is a built-in mechanical guarantee in BNB economics to reduce supply over time, making it a major attraction for investors looking for assets that may increase in value due to increasing scarcity.
Fourth: Future expansion and partnerships: In this vision, we discuss Binance's future outlook and upcoming developments that may increase demand for BNB.
Binance's vision revolves around transforming the current ecosystem into a comprehensive global infrastructure for Web3, focusing on efficiency, scalability, and security. Upcoming developments aim to increase demand for BNB by expanding its use in new and innovative areas:
1. Strong focus on Web3 and MetaFi
Binance's vision goes beyond being a centralized exchange; it aims to be a major bridge connecting the traditional Web2 world to the decentralized Web3 world.
• MetaFi concept: Binance aims to create an advanced infrastructure for decentralized finance (DeFi) that includes the metaverse, blockchain-based gaming (GameFi), and decentralized social networks (SocialFi) under one umbrella. BNB will be the primary currency facilitating interaction and interoperability among all these projects.
• Binance Web3 Wallet: The platform is developing and enhancing its self-custody wallet to simplify users' interactions with decentralized applications (dApps), making it easier for beginners to enter the Web3 world and thus increasing the use of BNB to pay gas fees on the BSC network.
. Radical improvements in the BNB Smart Chain (BSC)
To increase demand for BNB, the supporting network must be the best in the market. The roadmap for BNB Chain for 2025 and 2026 focuses on:
• Hyper-scalability: Developments aim to significantly increase the network's capacity to handle thousands of decentralized exchange swaps per second. This improvement is essential to attract more users and developers, especially in sectors like gaming that require ultra-fast speeds.
• Reducing transaction confirmation times (Latency Reduction): Working to make transactions almost instant, enhancing user experience and making the BSC network a strong competitor to other Layer 2 solutions.
• Enhancing security: With the increase in attacks and breaches in the crypto world, Binance invests in improving security measures for the network, increasing developers' and investors' confidence in building projects and using BNB.
. Expansion into decentralized gaming (GameFi)
Decentralized gaming is considered one of the largest promising sectors in Web3. Binance is heavily focused on this area:
• Developer support: Binance is "doubling" its efforts in the gaming sector to attract more developers to build their games on the BSC network.
• Partnerships and initiatives: Through partnerships with platforms like GameFi.org, efforts are underway to create active virtual communities and facilitate widespread adoption of blockchain-based gaming. This increased activity in gaming inevitably leads to increased demand for BNB to pay transaction fees within the game.
4. Institutional interest and regulatory compliance
Binance seeks to comply with global regulatory frameworks, attracting major institutional investors.
• Exchange-traded funds (ETFs): There is speculation about the possibility of launching a BNB ETF in the United States in late 2025 or early 2026. If this happens, it will open the door to massive institutional investments, significantly increasing demand for BNB.
In short, Binance's future vision is not just to maintain its current position but to dominate the emerging Web3 landscape, ensuring that BNB remains the essential and desired currency at the heart of this ever-growing ecosystem.
Fifth: Competitive comparison: Compare BNB with other exchange tokens (like KuCoin's KCS or Huobi's HT) to illustrate the superiority of the Binance model.
The BNB token significantly outperforms other exchange tokens like KuCoin Shares (KCS) and Huobi Token (HT) due to its much broader ecosystem, deeper market liquidity, and more advanced scarcity mechanism (burning).
The superiority of the Binance model can be illustrated by comparing the following aspects:
1. Market size and liquidity
The market capitalization gap is huge and reflects the superior market confidence in BNB:
• BNB: It is one of the largest cryptocurrencies in the world by market capitalization, exceeding a market value of $100 billion, giving it unparalleled liquidity.
• KCS and HT: Their market values remain in the low billions, with significantly lower daily trading volumes compared to BNB. The high liquidity of BNB allows for easier trading and execution of large transactions without significantly affecting the price.
2. Utility diversity and benefit (Utility & Use Cases)
The BNB model is multifaceted, while KCS and HT remain largely confined within their respective exchanges:
The advantage BNB (Binance Coin) KCS (KuCoin Shares) HT (Huobi Token) Trading discounts Yes, 25% discount on spot and margin trading. Yes, trading fee discounts. Yes, trading fee discounts. Launch platform (Launchpad) Strong and globally leading (Binance Launchpad/Launchpool), providing an opportunity to acquire early promising project tokens. KuCoin Spotlight, less known and influential than Launchpad. Huobi Prime, less active compared to Binance. Ecosystem (Blockchain) It has a private and thriving blockchain (BNB Smart Chain) hosting thousands of projects in DeFi and NFTs and Gaming, where BNB acts as "gas" (transaction fees). It has KCC (KuCoin Community Chain) but is much smaller and less reliant than BSC. It relies more on the Ethereum network and does not have an ecosystem as strong as BSC. Store of value Supported by global demand for Binance's services and its Web3 infrastructure. Its value is primarily linked to the profits of the KuCoin platform. Its value is primarily linked to the Huobi platform.
3. Scarcity & Burning Mechanism
The BNB burn mechanism is the most transparent and effective in supporting long-term value:
• BNB: The regular and independent "Auto-Burn" mechanism aims to reduce the supply by half (100 million tokens), creating increasing scarcity and supporting the price.
• KCS: It relies on repurchasing tokens from the market using 50% of the fees it earns, then burning them. This model is directly tied to the exchange's profits and may be less transparent than the "Auto-Burn".
• HT: Its mechanism is similar to KCS, where a portion of the platform's profits is allocated for repurchase and burning.
Conclusion
The superiority of the Binance model lies in transforming BNB from merely a "discount token" to the primary currency of a complete and independent blockchain network (BNB Smart Chain) with a massive ecosystem and millions of active users daily. This expansion of utility beyond the centralized exchange gives BNB a huge competitive advantage that KCS and HT do not possess to the same extent.
Additional advice: Conclude the article with the usual "risk warning" and invite readers to share their opinions on the future of BNB in the comments to increase interaction.
