Earlier, Binance was just an exchange, but now it is morphing into an all-embracing Kraken. However, many consider BNB or Binance Coin to be an underdog in the DeFi ecosystem. Let us go through the details in the following sections.
BNB – The DeFi Token
BNB is the currency in use within the Binance cryptocurrency exchange. During the initial stages, BNB was utilized for paying the trading fees, and users were given a twenty-five percent discount when they paid the fees using BNB.
Statistics reveal that around one percent of circulating BNB is presently locked into DeFi. These details challenge the traditional beliefs that BNB is not one of the DeFi tokens.
The reason many do not consider BNB as a DeFi token is due to the fact that it was developed by a centralized cryptocurrency exchange, which goes against the core principle of decentralization.
But, according to Binance CEO CZ, the present and future developments have paved the way for the creation of a decentralized architecture, and in addition, these developments will help in providing BNB a wider role.
Moreover, there are several reasons that consolidate the fact that BNB is actually a DeFi token.
- BNB is utilized for introducing decentralized staking and loans, in a very similar fashion to Compound, MakerDAO, and other DeFi projects.
- BNB based DeFi projects can be very pervasive since they are able to leverage the exchange’s present user base.
- DeFi firms have a defined value proposition. On the other hand, dynamicity of development as well as BNB token’s nature within the ecosystem lets BNB offer many different services.
- The presence of a Binance virtual machine facilitates smart contract execution, which is very similar to what happens in Ethereum.
- Binance has developed several partnerships, which means greater acceptance of BNB token in different projects.
The above points highlight the fact that BNB is strongly positioned in the DeFi field to become a key player in the near future.