What is the issuance mechanism of BNB?

The Binance Coin (BNB) issuance mechanism consists of inflation-based issuance and regular burn events designed to reduce circulating supply and increase value.

Feb 16, 2025 at 03:51 pm

Key Points

• Binance Coin (BNB) is the native cryptocurrency of the Binance ecosystem.
• BNB has several use cases, including paying trading fees, participating in Binance's launchpad platform, and making payments online.
• BNB is issued through an inflation-based mechanism and regular burn events.

Issuance Mechanism

BNB is issued through a process called inflation-based issuance. This means that new BNB tokens are created at a predetermined rate to circulate the supply. The issuance rate is calculated based on the total number of blocks mined on the Binance Chain, and it is currently set at 8%.

The newly minted BNB tokens are distributed to the Binance team, investors, and Binance users. The team's share is used to cover operational costs and expenses, the investors' share is used to pay for marketing and development, and the Binance users' share is distributed as a reward for their participation in the network.

Burn Events

In addition to inflation-based issuance, BNB is also subject to regular burn events. These events are designed to reduce the total supply of BNB in circulation and increase its value. The burning process involves sending a certain number of BNB tokens to a burn address, where they are permanently removed from circulation.

The frequency and size of the burn events are determined by Binance and are typically announced in advance. Binance has committed to continuing the burn events until 50% of the total supply of BNB (100 million tokens) has been burned.

Use Cases of BNB

BNB has several use cases within the Binance ecosystem, including:

• Trading Fees: BNB can be used to pay trading fees on the Binance exchange. This provides traders with a discount on fees and can save them money over time.
• Launchpad Participation: BNB is used to participate in Binance's Launchpad platform, where new tokens are offered for sale. This allows users to gain access to promising new projects before they launch on the open market.
• Payments: BNB can be used to make payments online at a growing number of merchants. This makes it easy for users to spend their BNB and take advantage of its low fees and fast transaction times.

Other Aspects of BNB Issuance

• Initial Allocation: When BNB was first launched, it was distributed as follows: 50% to the Binance team, 35% to investors, and 15% to Binance users.
• Tokens in Circulation: The total supply of BNB is 200 million tokens. There are currently 154 million BNB in circulation, with the remaining 46 million tokens scheduled to be burned over time.
• Proof of Stake: BNB is used to support the Proof of Stake (PoS) consensus mechanism on the Binance Chain. This allows BNB holders to earn rewards by staking their tokens.

FAQs

What is the inflation rate of BNB?
The inflation rate of BNB is currently set at 8%.

How often do BNB burn events occur?
Binance does not have a fixed schedule for BNB burn events, but they have committed to continuing the events until 50% of the total supply of BNB has been burned.

What happens to the BNB tokens that are burned?
The BNB tokens that are burned are permanently removed from circulation. This means that they cannot be used for any purpose and are essentially destroyed.

What is the purpose of the initial allocation of BNB tokens?
The initial allocation of BNB tokens was designed to provide funds for the development of the Binance ecosystem and to incentivize early adopters of the platform.

How can I use BNB?
BNB can be used to pay trading fees on the Binance exchange, participate in Binance's Launchpad platform, and make payments online.