Binance token surges to all-time highs in 2021
BNB is the native coin of the Binance Chain and powers the Binance ecosystem launched through an initial coin offering (ICO) on June 26th, 2017, 11 days before trading officially began on the Binance exchange. At that time the issuing price of BNB was equal to 2,700 BNB to 1 ETH or 1BTC for 20,000 BNB.
BNB was issued as an ERC-20 token, running on the Ethereum network, with a total supply of 200 million coins. 100 million BNBs were offered in the ICO, but the current total supply is lower than that due to the periodic burning events. Moreover, although BNB was initially based on the Ethereum network, the ERC-20 BNB tokens will be swapped with BEP2 BNB on a 1:1 ratio.
Today, the token price of BNB has swelled to almost $340 from its humble beginnings of $1.05. Arguably the BNB coin served little user utility outside of the Binance Chain but the introduction of the Binance Smart Chain in 2020 has been the key to BNB’s recent success. Binance Smart Chain allows the running of smart contracts and therefore applications to service retail users. BNB is required to make all this work.
This can be seen in the price chart below as the price of BNB has been fairly stable, growing to around $40 toward the end of 2020 in tandem with the launch of the Binance Smart Chain. Then, in early 2021 we saw an explosion of activity and users as DeFi dapps began to take off on the protocol. Binance Smart Chain now offers users almost identical products to its Ethereum rival, but with cheaper and faster transactions.
What is BNB used for?
The token can be used throughout the Binance ecosystem to pay for particular real-world services affiliated with Binance. Token holders can use BNB to pay for travel expenses, virtual gifts, and more. Moreover, BNB can be utilized when trading on the Binance Exchange, each trade will incur a standard fee of 0.1%. You can either pay the trading fees using the assets you are trading or you can pay for them with BNB. If you choose to pay in BNB, you will get a special discount on your trading fees. Therefore, those already trading on Binance should consider getting some and using them to pay for fees to realize lower trading costs.
Since the introduction of smart contracts on the Binance Smart Chain, holders of the token have been embraced into a growing ecosystem of decentralized applications. Of the 87 decentralized applications currently tracked on Binance Smart Chain, 64 of them are in the DeFi category and 6 in the exchange category. Meaning that over 80% of the dapps currently on BSC are focused on financial services.
Applications such as Venus, PancakeSwap, and Autofarm, which offer decentralized finance services such as yield farming, token swaps, and staking, have been surging in February 2021. Moreover, recently listed applications seem to be pivoting towards NFT marketplaces.
As mentioned the price of the token has been surging in early 2021 as users found true utility through Binance Smart Chain applications. At DappRadar we are seeing a shift in user activity in specific dapp categories that would seem to confirm that Binance Smart Chain is moving in a very positive direction.
Although, success doesn’t come without its costs, and we will be closely monitoring the situation as users possibly migrate away from Ethereum applications in search of faster and cheaper transactions. One thing is clear, Ethereum has a serious challenger and ETH 2.0 cannot come soon enough.
- Binance Smart Chain 2021 Report
- How to use Metamask with Binance Smart Chain
- Binance Smart Chain Dapps
The knowledge shared here is for informational purposes only and does not in any way constitute investment advice.