The History of Binance Coin (BNB)

Binance Coin (BNB) was first introduced by Binance, one of the largest cryptocurrency exchanges in the world, in 2017. Initially launched as an ERC-20 token on the Ethereum blockchain, BNB was created as part of Binance’s initial coin offering (ICO) to raise funds for the development of the exchange platform.

The Initial Purpose of Binance Coin

BNB’s primary function at the outset was to allow users to receive discounts on trading fees when using Binance. Binance employed a strategy that would phase out these discounts over time. Beyond trading fee discounts, Binance soon began to expand the utility of BNB across its ecosystem, allowing people to use it for various other services and transactions within the Binance platform, such as payment for listing fees, and token sales through the Binance Launchpad program.

The Shift to Binance Smart Chain

As Binance grew, so did the ambition for BNB. Binance eventually launched its own blockchain network called Binance Chain, and in 2019, the BNB token migrated from Ethereum to Binance Chain, transforming from an ERC-20 token to a native coin on Binance’s own network. This allowed Binance more control over the development of its ecosystem and reduced reliance on Ethereum’s blockchain and associated network issues like congestion and high fees.

The Introduction of Binance Smart Chain

In 2020, Binance introduced a parallel blockchain, Binance Smart Chain (BSC), designed for decentralized applications (dApps) and smart contracts. BNB became the native token used for gas fees on Binance Smart Chain. This expansion placed BNB at the heart of Binance Smart Chain’s DeFi (Decentralized Finance) ecosystem, further boosting the use-case of BNB beyond just exchange-related functionalities.

Burn Mechanism

A significant aspect of BNB’s design is its burn mechanism. Binance uses a portion of its quarterly profits to buy back BNB and burn (permanently remove) the tokens from circulation. This is aimed at reducing the total supply of BNB over time and enhancing its scarcity. Originally, this burn was meant to continue until 50% of the BNB supply (100 million tokens) had been destroyed. This burning process is automated through the Binance network and has become a defining feature of the token’s economics.

BNB's Emergence Within Binance’s Ecosystem

Over time, BNB has evolved beyond its original utility. It now serves a central role within the broader Binance ecosystem, including use-cases such as participating in staking, governance, transaction fees for dApps on Binance Smart Chain, and collateral in lending platforms.