Binance BNB: A Bridge Connecting the Binance Ecosystem and Empowering the Global Crypto Asset Industry

Binance BNB: A Bridge Connecting the Binance Ecosystem and Empowering the Global Crypto Asset IndustryIn the first quarter of 2020, Binance burned 3.37 million BNB, valued at $52

Binance BNB: A Bridge Connecting the Binance Ecosystem and Empowering the Global Crypto Asset Industry

In the first quarter of 2020, Binance burned 3.37 million BNB, valued at $52.47 million, setting a new record high for Binance's quarterly burn. This highlights BNB's increasingly important role as a key bridge connecting the Binance ecosystem, within Binance's open strategy. This burn amount represents a 52% quarter-over-quarter increase and a staggering 306% year-over-year increase. Based on Binance's mechanism of burning 20% of its quarterly profits, it can be estimated that Binance's first-quarter 2020 profit reached $262 million, approximately 1.85 billion RMB. This achievement is particularly noteworthy, given it was accomplished amidst the severe global economic impact of the COVID-19 pandemic.

The global economy suffered an unprecedented blow in the first quarter of 2020. The COVID-19 pandemic brought global production and life to a standstill, causing a sharp decline in consumption and widespread devastation in financial markets. US equities experienced an unprecedented ten days with four circuit breakers, and the 10-year US Treasury yield hit a 150-year low of just 0.4%. Even gold, typically considered a safe haven asset, was sold off due to liquidity shortages. The cryptocurrency market was no exception, with Bitcoin's price nearly halving, briefly falling below $4,000. Global economic data for the first quarter showed a clear recession, with China's GDP falling by 6.8% year-on-year, and US banks experiencing overall poor performance. Major players like JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Morgan Stanley, and Goldman Sachs saw year-on-year net profit declines of 69%, 45%, 46%, 89%, 30%, and 46%, respectively.

The turning point of the pandemic was yet to be seen, and the direction of the market in the second quarter remained uncertain. However, in the crypto asset space, Bitcoin showed remarkable resilience, quickly recovering from the pandemic's impact and regaining the $7,000 mark. BNB, ranked seventh in the global cryptocurrency market capitalization, leveraged its close connection to the Binance ecosystem network, not only successfully weathering the pandemic's impact but also achieving outstanding results that exceeded industry expectations. This success is a testament to the successful implementation of Binance's strategy of "building a complete ecosystem and empowering BNB."

Binance's "Open" Worldview: Building a Complete Ecosystem, Empowering BNB

As a leading company in the crypto asset field, Binance has consistently strived to leverage its global advantages to connect the upstream and downstream of the industry, facilitating the circulation of BNB's value within the industry chain, ultimately benefiting long-tail users. Over the past year, Binance has continuously promoted its "open" strategy. This openness is reflected both in strategic partnerships and in the opening up of its technological service capabilities. Major decisions such as the launch of Binance Cloud, the acquisition of CoinMarketCap (CMC), and the Binance Smart Chain, fully embody Binance's "open" worldview.

Binance began as a spot cryptocurrency exchange and within just three years grew to become the world's largest cryptocurrency exchange. In April 2019, Binance launched Binance Chain, formally entering the underlying public blockchain solution space. Underlying public blockchains are the infrastructure of blockchain technology, supporting the entire lifecycle of projects. The reason exchange-based public blockchains have attracted widespread attention is their ability to attract project developers to build DApps and directly serve them through the platform's token, enabling complete deployment from project development to secondary market trading and long-term operation. For trading platforms, underlying public blockchains can further expand the ecological space of platform tokens, increase user activity, and build a controllable and comprehensive ecosystem service network. For project developers, it reduces operating costs and allows for one-stop deployment and trading based on the exchange's public blockchain.

Binance Chain was initially created to better support the operation of the Binance decentralized exchange, Binance DEX. It provides a high-performance matching engine based on distributed consensus. After nearly a year of stable operation, Binance Chain has exceeded 78 million blocks and recorded over 74 million transactions. However, Binance Chain initially lacked smart contract functionality. To address this, the Binance Chain team released a solution on April 17th to expand Binance Chain's functionality through a parallel chain: the Binance Smart Chain. This solution retains Binance DEX's high-performance matching engine while adding developer-friendly smart contract functionality and full compatibility with the Ethereum ecosystem. This means all applications on Ethereum can run on the Binance Smart Chain, and Ethereum users can seamlessly connect with the Binance Smart Chain. It's foreseeable that the Binance Smart Chain will host a large number of DApps and financial crypto assets and natively support cross-chain interoperability, allowing users to easily transfer assets and exchange information across chains, with assets from both blockchains tradable on Binance DEX.

Binance Cloud, launched on February 17, 2020, is another "open service" from Binance. It provides a one-stop solution for digital asset trading platforms. Binance Cloud mirrors the core functionality of the Binance trading platform, including powerful matching engine technology, risk control settings, big data security systems, market depth, and liquidity, enabling partners to easily launch their own independent digital asset trading platforms. While some argue this is Binance cultivating competitors, in reality, through its cloud service, Binance can transfer its accumulated technology to more partners, reaching more B-end and C-end users. By sharing resources with ecosystem partners, it improves its technical service capabilities and further enhances BNB's trading depth through the secondary market. This reflects Binance's long-term vision for open development. Binance CEO Changpeng Zhao stated in an interview with Bloomberg that within five years, Binance Cloud will surpass Binance's blockchain asset trading platform as its largest revenue source. The launch of Binance KR marks a crucial step in its "open service" strategy.

Binance's substantial investment in acquiring CMC is the third important decision in its "open service" strategy. According to The Block, the acquisition cost was between $300 and $400 million, representing a significant portion of Binance's $578 million in cumulative profits for 2019. Zhao stated that CMC will expand its product offerings to include contract trading, derivatives, options, lending products, DApps, and all content related to data and dynamic updates. The ultimate goal is to make CMC the most core and data-diverse underlying data platform in the crypto asset industry. If Binance Cloud and Binance Smart Chain serve large and small B-end clients, respectively, then CMC, as an infrastructure product for the crypto asset industry, directly impacts a wide range of C-end users. SimilarWeb data shows that CMC attracted 207.2 million visits in the past six months, making it the undisputed traffic hub in the cryptocurrency industry. Combining Binance's tens of millions of global users and its network covering over 180 countries and regions, these three open-ended decisions will lay the foundation for the basic structure of the complete Binance ecosystem.

Accelerated Binance Ecosystem, Actively Empowering BNB

To date, Binance has conducted 11 BNB burns, each reflecting Binance's iterative progress. On October 18, 2017, 986,000 BNB were burned for the first time. Subsequently, driven by the Bitcoin bull market, the burn amount continued to grow. 2018 was a crucial year for Binance's global breakthrough, establishing connections with countries like Uganda, Jersey, Liechtenstein, and Singapore, and launching fiat exchanges in Uganda and Jersey. Zhao stated that in 2018, Binance added at least 50 partners supporting BNB circulation, with BNB usage scenarios encompassing flight bookings, hotels, restaurants, online games, and entertainment, allowing users to even use BNB as collateral for loans.

Since then, Binance has actively participated in every major transformation of the crypto asset industry. In January 2019, Binance Launchpad was relaunched, leading a wave of discounted crypto asset subscriptions. A large number of investors flocked to the market to exchange BNB for IEO subscriptions, ultimately driving BNB to a historical high of $39.59 in June, a more than 500% increase. Each IEO had a return on investment exceeding 400%, creating a massive wealth effect and triggering industry imitation, but as the market cooled in the second half of 2019, most imitators gradually disappeared. Binance Launchpad completed 11 projects in 2019, raising over $56 million. In 2020, Binance continued to conduct IEOs during the bear market, continually searching for high-quality projects.

In 2019, the construction of the Binance ecosystem accelerated significantly. In terms of fiat on-ramps, in addition to Jersey and Uganda, Binance also established Binance US, Singapore, Australia, and Latin American fiat trading platforms with ecosystem partners. Simultaneously, Binance launched IEOs, public blockchains, DEXs, contracts, C2C, and established the Blockchain Charity Foundation (BCF) to raise funds through BNB, ensuring the entire process of donation tracking and transparency. In 2019, Binance Charity raised $3,076,215, benefiting over 100,000 people