The development journey of the BNB Chain platform (Part 1)

• Overview of BNB Chain
• History begin
• Network Architecture
• overview
• BNB Sidechain & Zk-Rollup
• A long way to develop
• BNB
• Epilogue

Overview of BNB Chain

Many Layer 1 smart contract platforms have been competing fiercely for market share in the blockchain space since the launch of Ethereum. The goal of gaining market share has created new alternatives to the Ethereum blockchain . It is noteworthy that the competition has created various approaches to network architectures, go-to-market strategies, and new use cases. 

BNB Chain is an alternative to Ethereum and it has seen tremendous growth since its inception. The native coin of this blockchain – BNB has successfully maintained its position as one of the most valuable crypto assets in the world. 

Congestion and slow implementation of Layer 2 scaling solutions on the Ethereum network and the ability to connect assets between chains have allowed BNB Chain and its alternatives to gain a competitive edge. 

In addition, the acceptance of BNB Chain can also be attributed to the strong financial resources from the Binance exchange. In this article, we will review the history of BNB Chain, its development, and where it stands in the current market. 

To preserve its position as the most valuable smart contract platform after Ethereum, how does BNB Chain plan to continue to evolve its architecture, user base, and execution strategies? Let's answer this question with the TraderH4 team in the article below.

History begin 

The creation of BNB Chain and the BNB coin began with the launch of the Binance centralized exchange. Binance exchange was founded in 2017 by Changpeng Zhao (commonly known as CZ). Prior to founding Binance, CZ earned a degree in computer science and developed advanced trading software for traditional financial firms such as the Tokyo Stock Exchange and Bloomberg.

In mid-2017, CZ followed his passion for cryptocurrencies and founded the Binance cryptocurrency exchange we know today. Binance held an ICO of BNB to develop the exchange and fund the company's operations, raising approximately $15 million. At the beginning of 2018, Binance became the largest cryptocurrency exchange by trading volume, generating $200 million in profit during its second full quarter of operations. 

Binance remains the largest cryptocurrency exchange by trading volume. At the time of writing, Binance's trading volume over the past 24 hours has reached US$10.5 billion while FTX (2nd place) has US$1.6 billion. 

Part of BNB Chain's path to market share can primarily come from successfully converting the CEX user base into DeFi users through their brand value.

Initially, BNB was an Ethereum-based ERC-20 utility token used to reward holders through discounting transaction costs. In early 2019, following the launch of Binance Chain, ERC-20 token contracts were replaced by BEP standard contracts. Binance and their community developed Binance Chain to fulfill their vision of a decentralized exchange (DEX).

By 2020, the community took the source code from the Ethereum network and launched a modified Proof of Stake Authority EVM-compatible blockchain called Binance Smart Chain to store smart contracts. Eventually, BNB became the native token of both Binance Chain and Binance Smart Chain.

As of February 2022, both Binance Chain (renamed BNB Beacon Chain) and Binance Smart Chain (renamed BNB Smart Chain) have evolved into a unified modular system known as BNB Chain.

You may be interested : Binance Chain and Binance Smart Chain will merge into the BNB Chain ecosystem

Network Architecture

overview

The BNB Smart Chain was developed to run alongside the BNB Beacon Chain, as the Beacon Chain was built with its own purpose and limitations. Beacon Chain is developed to serve DEX and is built to have high transaction throughput and give users more advanced experiences compared to centralized exchanges. 

However, Beacon Chain is not optimized for smart contract functionality or anything other than a highly efficient order matching engine. Upgrading the Beacon Chain to introduce additional functionality will result in a need for additional transaction throughput, making the network less efficient. Therefore, the Binance community decided to develop BNB Smart Chain separately.

When the two blockchains merge, the Beacon Chain becomes the dedicated layer used for governance (staking and voting) and the BNB Smart Chain becomes the dedicated layer for consensus and EVM execution. 

Despite going through a governance transition that connects the two chains, BNB Smart Chain is not Layer 2. The connection is like the upcoming Ethereum 2.0 merge , where the execution layer of the currently running Ethereum Mainnet will be plugs on top of the Ethereum Beacon Chain's concurrently running consensus engine.

BNB Sidechain & Zk-Rollup

BNB Sidechain framework is a module designed to create BNB Smart Chain compatible sidechains. It defines the requirements for integration with the BNB Smart Chain ecosystem and brings EVM-compatible features, ready to develop features such as staking, RPC-API, and smart contracts.

The main purpose of BNB Sidechain is to allow any project developer to deploy their blockchain with custom specifications and validators. The platform will also allow them to be connected to the BNB Smart Chain infrastructure. Validators can run with fewer validators than BNB Chain, depending on BNB Sidechain implementers and their desired level of security. 

Application owners or community stakeholders can run these validators. Finally, BNB Chain can scale the ecosystem with this modular design and flexibility.

The plans also include the launch of Zk-Rollup for high-performance scaling, allowing sidechains to have more customized solutions. Zk-Rollup is yet to launch, but there are three experimental sidechain projects in development: Cube – an application focused on the metaverse, Project Galaxy – an application focused on bringing credentials to the blockchain, and Meta Apes – a gaming application.

A long way to develop

BNB Chain has come a long way since 2017. Its architectural evolution has resulted in a potentially significant value proposition. The overall design allows the network to process transactions of varying complexity in parallel with governance and consensus. 

With this flexibility, workloads and upgrades handled on the sidechain will work in harmony with consensus to independently ensure completeness and network security without affecting other sidechains. 

Developers should be able to strike the desired balance between security and performance depending on their specific business requirements. Ultimately, if the design concept succeeds, BNB Chain could be the first complex, modular network to come to market with a much larger user base.

BNB 

In July 2017, 200 million BNB was distributed to the founding team (40% equivalent to 80 million BNB), angel investors (10% equivalent to 20 million BNB) and through public sale (50% or 100 million BNB).

The public sale of 100 million BNB was set at a price of 0.15 USD per BNB and the project raised 15 million USD. The allocation from the public sale is marked for use as follows:

• 35 million BNB (35%) to upgrade the Binance platform and exchange system.
• 50 million BNB (50%) for branding and marketing for Binance.
• 15 million BNB (15%) to reserve in case of emergency.

Both standard types of BNB are interoperable on both Beacon Chain and BNB Smart Chain. BNB BEP-2 is native token on Beacon Chain and BNB BEP-20 is native token on BNB Smart Chain.

The use cases of BNB coin have been evolving since its inception. Initially, BNB was mainly used to run a validator node or receive discounted transaction fees on the Binance exchange. 

As of now, BNB can be used for staking, voting through on-chain governance, participating in the token purchase program on Binance Launchpad, providing liquidity on the Binance Liquid Swap, and paying transaction fees on the Binance Launchpad. Binance exchange. Additionally, BNB can also be used to make credit card payments and process payments for select travel arrangements. 

BNB also has a deflationary burn mechanism. Initially, Binance used 20% of its quarterly profits to buy back and burn BNB, removing the coins from circulation. Quarterly recording has been replaced with BNB Auto-Burn to provide greater transparency and predictability. Binance's goal is to eliminate 100 million BNB or 50% of the total supply.

Epilogue

Above is the first part of the article “BNB Chain development journey”. TraderH4 team hopes that through the above article, readers can better understand the history of BNB Chain and BNB coin. At the same time, readers have a more intuitive view of the core architecture of BNB Chain and the points that help it maintain its position in the cryptocurrency market.

In the next section, we will continue to learn about the ecosystem of BNB Chain and its development plans in the future. Join the TraderH4 team to look forward to part two on the TraderH4.com website .

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