We all know that native tokens play an integral role in the running of blockchains, but what sets a token with high utility apart from others less proven? We offer an insight into BNB here.
We all know that native tokens play an integral role in the running of blockchains, but what sets a token with high utility apart from others less proven?
In short, ensuring strong foundations for a blockchain often relies upon the design and practical use cases of its native token.
A healthy native token is the lifeblood of a successful blockchain. For example users need to be able to confidently depend on the native token their chosen blockchain relies on. There also needs to be widespread utility.
So, let’s take a closer look at BNB, the design mechanisms in place and how the token is practically utilized by our broader ecosystem.
Burn BNB, Burn!
Let’s begin with the simple fact that BNB is indeed a deflationary token. Did you know that BNB’s auto-burn system continues to consistently reduce its total supply to 100,000,000 BNB? You can even track the burn in real time via BNB Burn.
Track the burning of BNB in real-time
The Auto-Burn mechanism is a relatively recent upgrade. Initially, Binance used 20% of its quarterly profits to buy back and burn BNB, removing them from circulation. The quarterly burn was replaced with BNB Auto-Burn to provide greater transparency and predictability.
The upgraded BNB Auto-Burn mechanism adjusts the amount of BNB to be burned based on BNB’s price and the number of blocks generated on BNB Smart Chain (BSC) during the quarter. This offers greater transparency and predictability to the BNB community.
BNB Chain's daily active users continue to drive the deflationary process
By the end of the burn function, 100 million BNB (i.e., 50% of the total supply) will be eliminated. Ultimately, the deflationary mechanism paired with transaction activity continues to exert upward pressure on the value of BNB and supports its value during market-wide fluctuations.
Additionally with the introduction of BEP-95, a BNB Evolution Proposal the network will burn a fixed ratio of each block’s gas fees that validators collect. So what about our validator set?
BNB Chain Validators
BNB Smart Chain has 26 active validators and many inactive validators. The inactive validators have no reward so the incentive for the runner to ensure the node quality and the delegation from the BNB holders are not enough. In order to decentralize the network further, more validators will be introduced.
BNB Chain is less decentralized than Ethereum now, but more decentralized than many others. It will become more and more decentralized as our tech team continues to make progress. BSC (BNB Smart Chain) is already on its way to 41 active validators. Check it out here.
But what exactly does it take to become a BNB Chain validator, and how does it impact BNB?
Joining BNB Smart Chain as a validator is a process that is open to all, with the relevant guidelines and step-by-step instructions set out here. Prospective contributors would also be required to have 10,000 BNB staked, though in reality most validators have upwards of 800,000 BNB staked. However, validators seeking to become a candidate can start with approx. 130,000 BNB+ to become a candidate.
Currently over 20 million BNB is bonded via the validator set
In order to actually start producing blocks, a validator candidate needs to become an elected validator. Elected validators are the top 21 validator candidates with the highest amount of voting power. They change through an ongoing election process, and you can check them out on the top validator list on our website.
This process continues to increase the robustness and availability of the network. BNB Smart Chain should survive even if more than half of the validator set were censored or taken down in an either incidental or hostile way.
BNB Use Cases
BNB can be utilized throughout BNB Chain’s growing ecosystem which continues to develop exciting dApps in a range of different verticals. From enjoying games, social decentralized applications or even taking advantage of high-yields offered on DeFi applications- you have a broad range of choices.
Users can navigate DappBay for a full range of the options they have at their disposal.
DappBay's all new campaign feature outlines exciting new opportunities
The ever growing list of retail use cases for BNB continues to excite users. Whether you want to book a flight through Travala or finalize a payment through HTC, your BNB will get the job done. For a full list of your opportunities you can visit the Binance website to find out more about retail opportunities.
As mentioned above, a healthy native token is the lifeblood of a successful blockchain, and here at BNB Chain we are continuing to introduce a myriad of mechanisms to ensure that BNB continues to thrive. Lookout for more exciting use cases to come!