What Is BNB (BNB) and How Does It Work?

By: WEEX|Sep 22, 2025

What Is BNB (BNB)?

BNB is the native cryptocurrency of the BNB Beacon Chain and serves as a versatile digital asset used both within and beyond its native ecosystem. It functions as a means of payment for goods and services and is also utilized to cover transaction fees (gas fees) on the BNB Smart Chain.

Beyond these core functions, BNB offers a range of utilities within the BNB Chain network, including:

Discounts on trading fees when used for payments on certain exchanges
Eligibility for exclusive token sales and launchpad events
Access to a growing ecosystem of decentralized applications (DApps), DeFi platforms, and blockchain-based games

A distinctive feature of BNB is its auto-burn mechanism, designed to systematically reduce the total supply until it reaches 100 million BNB. This process aims to balance supply with demand over time.

How is the BNB Chain Different from Ethereum?

While Ethereum and BNB Chain share some technical similarities—such as supporting smart contracts and decentralized applications—they differ significantly in philosophy, governance, and design.

Ethereum began as a decentralized, open-source project with a vision to expand the possibilities of blockchain technology beyond Bitcoin. In contrast, BNB Chain originated from Binance, a centralized, for-profit company that aimed to build one of the world’s largest cryptocurrency exchanges. Although both platforms strive for innovation, their core incentives and operational models vary.

Another key distinction lies in their consensus mechanisms. Ethereum transitioned to Proof of Stake (PoS) with “The Merge” in September 2022. BNB Chain, on the other hand, employs a hybrid model known as Proof of Staked Authority (PoSA), which combines elements of Proof of Stake and Proof of Authority.

This hybrid approach reflects a deliberate trade-off: BNB Chain prioritizes scalability and efficiency over full decentralization, a fundamental ideological departure from Ethereum’s more distributed validator structure.

In the past, BNB was often seen as having narrower utility compared to Ethereum’s ETH, particularly due to the latter’s larger and more diverse DApp ecosystem. However, BNB Chain has significantly expanded its decentralized application environment, now hosting more total value locked (TVL) than networks like Solana and Cardano .

How Does BNB Chain Work?

BNB Chain relies on the Proof of Staked Authority (PoSA) consensus model, which integrates staking with identity-based validation.

Key aspects of the mechanism include:

Prospective validators must stake a minimum of 10,000 BNB to be considered.
Users with smaller holdings can delegate their BNB to validators and receive a share of the rewards.
Validators operate under public identification, adding a layer of accountability.
The network intentionally uses a smaller number of validators compared to Bitcoin or Ethereum, aiming to enhance efficiency and security through reduced validator concentration.

This design supports higher transaction throughput with lower energy consumption, though it does so at the cost of greater centralization.

Advantages and Disadvantages of BNB

Advantages:

Low Transaction Fees: Thanks to its efficient consensus model, BNB Chain offers significantly lower fees than many competing smart contract platforms.
Utility for Exchange Users: BNB offers practical benefits such as reduced trading fees, special access to events, and support across a variety of platforms.
Controlled Supply: The auto-burn mechanism systematically reduces BNB supply, potentially supporting its long-term value.
Smart Contract Support: BNB Chain is highly programmable, allowing developers to build and interoperate DApps and financial instruments.
Tokenization Capabilities: The network supports digitization and tokenization of real-world assets like property, art, or commodities.

Disadvantages:

Centralization Concerns: The influence of Binance and the limited number of validators make BNB Chain more centralized than many other blockchains.
Security Risks: The concentration of validation power creates a higher risk of targeted attacks. Historical breaches, such as the 2022 bridge exploit resulting in a $570 million loss, highlight ongoing security challenges.

Who Created BNB?

BNB was introduced by Changpeng Zhao (commonly known as “CZ”), who founded Binance in 2017. With a background in computer science and experience at Bloomberg Tradebook and other financial technology firms, CZ entered the crypto space around 2013. He contributed to several blockchain projects before launching Binance, which rapidly grew into one of the world’s largest cryptocurrency exchanges.

In late 2023, CZ stepped down as CEO of Binance after legal proceedings in the United States. Despite this transition, Binance and BNB continue to operate and develop within the global digital asset ecosystem.

FAQ

1. Is BNB a good investment?

As with any cryptocurrency, investing in BNB involves risks and opportunities. Its value is tied to the adoption of the BNB Chain, market sentiment, and broader crypto market trends. Prospective investors should perform thorough research and consider their financial goals and risk tolerance. If you're interested in exploring BNB, you can purchase it securely on WEEX.

2. Why does BNB have value?

BNB derives value from its utility within the BNB Chain ecosystem—powering transactions, enabling staking, granting access to services, and offering fee advantages. Its deflationary token model and role in one of the largest blockchain networks also contribute to its economic value.