Binance is one of the most widely used crypto exchanges on a global scale. It provides trading and brokerage services.
The name of the platform consists of two words "binary" and "finance", which means digital finance as in the IT industry binary refers to the system that only uses two digits - 0 and 1.However, Binance represents more than an exchange platform. It is a whole environment that includes:
- Binance exchange
- Binance DEX
- Binance Smart Chain
- Binance Coin (BNB)
Foundation
Binance was officially launched on July 14, 2017, in China. The founder and CEO of the network is Chinese-Canadian coder Changpeng Zhao (CZ). Now he is among Forbes's list of billionaires.
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In September the Chinese government banned Initial Coin Offerings (ICOs) and shuttered markets that traded cryptocurrencies or offered crypto-related services. Before the ban, Binance relocated its headquarters to Japan. Afterwards, it opened offices in Taiwan and made Malta the base of operations.
Binance Coin
Binance Coin (BNB) is the native cryptocurrency of Binance. Actually, the ICO took place from June 26 to July 3, 2017, which is 11 days earlier before the launch of the exchange. During the ICO, Binance Coins were distributed among different participating members, among them early investors and the establishing crew. 80 M BNB (around 40%) went to the founding team, 20 M (around 10%) went to the early investors, and 100 M (around 50%) were distributed via public sale. At the public sale, the price of one BNB token was 15 cents. Thus, the cumulative sum raised during the ICO was $15 M in BTC and Ether.
The amount was directed to the platform and exchange updates, branding, and education purposes. 15% was kept as a reserve for any predicaments or unexpected turnouts. BNB is used as a means of payment for transaction fees, earning passive income, and using it as collateral to get crypto loans.
Originally, the coin was deployed on Ethereum as an ERC 20 token. Later when the Binance ecosystem developed its Chain, BNB moved there as a cryptocurrency that fuels the network. Accordingly, its standard changed from ERC-20 to BEP-2.
The coin's supply, the total of which is 100 million decreases over time, as the Binance team regularly conducts coin burns. BNB burn takes place each quarter based on its trading volumes of the past quarter.
Binance Smart Chain
In September 2020 Binance launched Binance Smart Chain (BSC) which is a blockchain that works simultaneously with Binance Chain. The distinction between the two is that the BSC has smart contract implementation and is cooperative with Ethereum Virtual Machine (EVM).
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It's worth noting that the two are fully independent blockchains and Binance Smart Chain could run even if Binance Chain went offline. BSC adopted an innovative consensus of Proof of Staked Authority (PoSA), which brings together Proof of Authority (PoA) and Proof of Stake. This consensus mechanism suggests becoming validators by staking Binance Coins (BNB). Also, by staking BNB holders get rewards from validators.
The dual nature of Binance Chain and BSC empowers users to develop decentralized applications (dApps), the biggest of which is Binance DEX.
Binance DEX
The primary exchange platform produced by Binance is Binance.com which is centralized. That means that the control of the network belongs to the company. On April 23, 2019, Binance launched its Decentralized Exchange (DEX) on Binance Chain. 2-month testnet period and a bug bounty program preceded the launch. It is an alternative to Binance.com, which offers to release, use and trade digital assets in a decentralized way. Users can access the DEX by visiting Binance.org.
Talking about the need for Binance DEX, the company's CEO CZ (Changpeng Zhao) said that it provides more possibilities and offers a trustless and transparent financial system. With the introduction of Binance DEX users became able to control their assets without central custody of the capital.
To manage activities, Binance also introduced Trust Wallet.
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Final Thoughts
Binance network and its in-built cryptocurrency Binance Coin (BNB) have been making new records. On May 10, 2021, the coin reached a new all-time high crossing $686. Currently, it is the third largest cryptocurrency by market cap which currently stands at $102.5 billion.
The number of DeFi projects operating on the Binance Smart Chain is also growing in parallel with the total value locked in them. Data shows that the TVL (Total Value Locked) in DeFi on the BSC has reached record highs of around $43 B. One of the most popular BSC-based projects is the DEX PancakeSwap, which TVL reached $9.5 B.