What is BNB crypto?
Summary
BNB is the crypto-asset used on BNB Smart Chain, a blockchain for Ethereum-compatible applications. BNB pays network fees and helps support validator selection and governance.
- BNB Smart Chain runs Ethereum-compatible smart-contract apps on its own network.
- BNB pays fees even when an app transfers another asset.
- Virtune BNB ETP holds BNB as collateral but cannot be used to pay network fees.
What is BNB?
BNB is the native crypto-asset of BNB Chain, including BNB Smart Chain, where it pays transaction fees. BNB Smart Chain runs applications such as services that exchange digital assets. Its smart contracts are compatible with Ethereum's tooling, allowing developers to use familiar tools on a separate network. BNB originated in 2017 in connection with the Binance exchange and later took on a role in BNB Chain.
Imagine an app swapping one token for another. The smart contract applies the swap's rules and validators confirm the transaction. Neither token has to be BNB, but the user pays the network fee in BNB. That is the asset's direct connection to app activity.
What else does BNB do?
BNB can be staked to support validator selection and used in network governance. A user making a swap mainly encounters the fee; staking and governance concern how the network operates and changes. Validators do not make every app safe, and activity on a swap service does not set BNB's price.
BNB Smart Chain's validator arrangements also matter to a reader asking how decentralised the network is. Block production is carried out by a selected validator set, with selection based on staked BNB rather than by one app operator alone. The distribution of stake therefore matters when assessing who can take part.
BNB directly or through an ETP
Direct BNB can pay fees and be used in network functions. Virtune BNB ETP instead provides BNB price exposure through a security. It is physically backed with BNB held as collateral. The ETP investor does not hold BNB in a wallet and cannot use the security to pay fees, stake or vote. BNB broker access covers the two listings of the BNB price security.
Costs when buying Virtune BNB ETP
| Cost | Charged by | When |
|---|---|---|
| Brokerage commission | Broker | On every purchase and sale |
| Difference between bid and ask price | Market | On every trade |
| Management fee, 1.95% per year | Issuer | Ongoing, from the product's value |
| Currency conversion | Broker, if applicable | If the product trades in another currency |
Risks to understand
BNB's price can change sharply. Apps on BNB Smart Chain have risks beyond those of the network. Direct holders manage wallet or custodian choices; the ETP adds issuer, custody and exchange-trading risks. Physical backing does not prevent a price loss.
Virtune products in this area
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Sources
- BNB Chain: BNB Smart Chain overview
- BNB Chain: BSC Is Now BNB Chain
- BNB Chain: BSC Validator Overview
- Virtune Investor Relations: Collateralization Methodology
