Understanding BNB Chain: A Comprehensive Overview of Its Functionality

What is BNB Chain and its ecosystem?

BNB Chain is a blockchain project initially founded by the cryptocurrency exchange Binance in 2019. However, it has since become community-driven. Binance states that it is one of many contributors operating within the BNB Chain ecosystem.

The name “BNB Chain” stands for “Build ’N Build” Chain and emphasizes ongoing community-led development. It is the second-largest Layer 1 ecosystem after Ethereum in terms of decentralized exchange volume and comes third for daily active users, according to DefiLlama.

The BNB Chain is composed of five different blockchain networks serving various purposes. The native token, BNB, serves dual roles: it functions both as the fuel for transactions on the chain and as a governance token across these networks.

• The first is the BNB Beacon Chain, which is used solely for governance and staking of BNB tokens.
• The second, and more widely discussed, is the BNB Smart Chain. This network provides smart contract capabilities and serves as the default layer for BNB Chain dapps. Additionally, the BNB Smart Chain is compatible with the Ethereum Virtual Machine, meaning it can run Ethereum-based dapps.
• The BNB Chain ecosystem also includes three specialized blockchain networks currently under development: zkBNB and opBNB. These networks use optimistic and zero-knowledge rollups as their types of scaling technology. Both zkBNB and opBNB aim to facilitate scalable app development, offering higher throughput and minimal to zero transaction costs.
• The fifth network in the ecosystem is BNB Greenfield, a decentralized storage network specifically designed to support data-intensive decentralized applications in gaming and social media niches within the BNB ecosystem. Collaborating closely with the other networks in the BNB ecosystem, Greenfield aims to deliver programmable storage solutions that integrate seamlessly with smart contracts hosted on the BNB Smart Chain.

Does Binance own or control BNB Chain?

Although initially developed by Binance, the BNB Chain operates independently of the exchange. Binance CEO Changpeng Zhao has previously claimed that the common misconception that Binance owns or controls the BNB Chain is inaccurate. While Binance has invested over $1 billion in the BNB Chain ecosystem, this investment does not equate to ownership or control, he has argued.

In the past, the exchange was more willing to associate itself with the blockchain ecosystem. The initial chain was called Binance Chain at its inception and BNB was originally known as Binance Coin. But over time, the exchange largely removed its branding from the blockchain ecosystem, likely to show separation between the two — perhaps for regulatory reasons.

The exchange has made significant efforts to decentralize the network, with the aim of extending the influence of BNB beyond Binance itself. This separation between Binance and BNB Chain is indicative of a broader trend in the crypto industry towards decentralization.

The ultimate goal is to create independent, community-driven ecosystems that operate without the control of any single entity. In this context, Binance serves more as a catalyst for the development and growth of the BNB Chain rather than as its controller.