Longcaller

Binance Coin

Binance Coin is a token of Binance exchange.

Binance is one of the biggest cryptocurrency exchanges. It was started in August 2017 and quickly got an adoption.

Binance is a cryptocurrency-only exchange, as there are no fiat pairs (e. g. BTC/USD). This is made on principle, so there are no plans to add fiat trading on the exchange. However, there are several Tether pairs, and users can trade Bitcoin, Ethereum, and other cryptocurrencies with USDT.

Binance team worked hard on designing a scalable technical architecture. As stated in the white paper, Binance’s “matching engine is capable of sustaining 1,400,000 orders per second”. That way, Binance makes sure that order matching will work stably even on a high load, and all orders will execute at the desired price.

Binance’s revenue model is traditional to other exchanges. It makes money by taking various fees. First, there is a trading fee, taken with each trade. Then, there is a withdrawal fee, which is taken when a user withdraws his assets. The size of this fee depends on the coin. There is also a listing fee, which is required to list a coin on Binance. In future, additional fees might be introduced for new features, like margin fee.

Binance plans to implement margin trading. That will allow trading on Binance with leverage. Binance also wants to introduce futures to the cryptocurrency world. Futures trading is a very popular financial instrument on traditional exchanges, and few cryptocurrency exchanges allow to trade futures.

At the moment, Binance is a centralized exchange, with the company controlling servers, accounts, and wallets of each user. In the future, Binance plans to make the exchange decentralized.

Binance Coin (BNB) is an ERC20 token. There are 200 millions of BNB issued and new tokens won’t be created. Binance Coin is traded on Binance. Its main utility purpose is to pay fees on Binance. BNB can be used to pay any fees, including trading fee, withdrawal fee, and others. If one pays the fee with BNB, the fee is discounted. This discount will exist for 4 years. In the first year, the discount will be 50%, in the second — 25%, in the third — 12.5%, and in the fourth year — 6.75%.

Every quarter, Binance buys back the BNB sold on the ICO and burn it. That way, only 100 million BNB will stay in existence. Binance spends 20% of its profits on buying tokens back.

Binance team plans to integrate BNB into the decentralized exchange when it will be done. “BNB will be used as one of the key base assets as well as gas to be spent”, the whitepaper says.

The team conducted the ICO to collect funds for development and marketing. They issued 200 millions of tokens and sold half of them. The other half is split between the founding team and angel investors. That way, ICO investors got 100 million tokens, angel investors got 20 million, and the founding team is left with 80 millions of tokens.

Collected funds will be used for the growth of Binance. 35% of funds will be used for development, which includes hiring and training staff. 50% of funds will be spent on branding and marketing. Finally, 15% of the money will be kept in reserve as an emergency fund.

The team will be vested for 4 years, with the initial release of 20%, or 16 millions of tokens, and then additional releases of 20% of tokens after each year.

Timeline

  • June 14, 2017: Start of the project. binance.com
  • June 30, 2017—July 1, 2017: Binance ICO. twitter.com
  • July 14, 2017: Start of the trading on Binance. support.binance.com
  • August 14, 2017: Initial commit of Binance API on Github. github.com
  • October 18, 2017: First burn event of BNB tokens. As was planned, Binance used 20% of their quarterly profits to buy tokens back from investors. support.binance.com
  • March 8, 2018: A phishing attack happened on the Binance. Hackers got access to several Binance accounts and tried to transfer Bitcoin from these accounts by trading on VIA/BTC pair. The system noticed abnormal activity and halted withdrawal. Shortly after that, the trades were reversed to return Bitcoins to the hacked users. medium.com
  • March 13, 2018: Binance announced the start of development of Binance Chain, a blockchain for cryptocurrency trading. medium.com
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