What is BNB, and how does BNB Chain work?

What is BNB, and who is behind it?

BNB is the utility token of the BNB Chain ecosystem. People use it to pay transaction fees, to stake (lock up tokens to help secure the network and earn rewards) and to take part in governance¹. It works on three connected networks: BNB Smart Chain (BSC), opBNB and BNB Greenfield¹.

BNB started life as the token of the Binance exchange, founded by Changpeng Zhao⁷. According to the SEC's 2023 complaint, Binance sold 100 million BNB in an initial coin offering (ICO) that ran from about June 26 to July 3, 2017, raising roughly $15 million⁹. BNB Chain says that at the 2017 launch a commitment was made to burn 100 million BNB, half of the total supply, so the token started with 200 million; it was first issued as an ERC-20 token on Ethereum and later migrated to a native version¹². That complaint was later dismissed, but the sale itself is described there in detail.

BNB Smart Chain was introduced in 2020 as a second chain running alongside the original one, so that the ecosystem could support smart contracts⁶. Today BNB Chain describes its quarterly burn as independent of the Binance exchange³, but the two remain closely associated in name and history.

How does BNB Smart Chain reach consensus?

BSC uses Proof of Staked Authority (PoSA), which mixes two ideas. As in proof of stake, BNB holders stake or delegate tokens to validators. As in proof of authority, only a limited, known set of validators take turns producing blocks⁴⁶. The design aims for short block times and low fees⁴.

Every day after 00:00 UTC, the chain elects the 45 validators with the most stake. The top 21 are called Cabinet validators and the other 24 are Candidates⁵. Blocks count as final once two-thirds or more of validators vote normally, which the documentation says takes two blocks⁴.

Validators earn BNB from transaction fees and lose part of their stake if they misbehave, for example by signing two conflicting blocks or staying offline⁵. Because BSC is compatible with the Ethereum Virtual Machine, apps and wallets built for Ethereum can work on it with few changes⁴. Our explainer on smart contracts covers what those apps are.

How do BNB burns reduce the supply?

"Burning" means sending tokens to an address from which they can never be spent, removing them for good. BNB has two burn mechanisms, and BNB Chain says together they aim to bring the total supply down to 100,000,000 BNB¹.

The Auto-Burn happens every quarter. The amount is adjusted according to BNB's price and the number of blocks produced on BSC during the quarter, and the formula's parameters have been adjusted after network upgrades³.

The real-time burn came from a proposal called BEP-95, published in October 2021. At the end of each block, a set share of the gas fees collected is sent to the burn address; the initial proposed share was 10%². Validators decide the ratio in use¹.

What is BNB used for?

• Gas fees: every transaction or smart-contract call on BSC is paid for in BNB¹⁴.
• Staking: holders delegate BNB to validators to help secure the chain and share in rewards¹.
• Governance: staked BNB gives a say in BNB Chain proposals¹.
• Cross-chain operations within the BNB Chain ecosystem⁶.

BNB also moves between BSC, opBNB and BNB Greenfield¹. Moving tokens between networks carries its own risks; our explainer on cross-chain bridges explains why.

What legal cases have involved BNB and Binance?

On June 5, 2023 the SEC sued Binance Holdings, its US affiliate BAM Trading and Changpeng Zhao in federal court in Washington, D.C. Among other claims, it alleged that BNB, the BUSD stablecoin and products called Simple Earn and BNB Vault had been offered and sold without registration⁷. These were allegations. On May 29, 2025 the SEC and the defendants agreed to dismiss the case with prejudice, meaning it cannot be refiled; the SEC said it made that choice as a policy matter⁸.

Separately, on November 21, 2023 the US Department of Justice announced that Binance had pleaded guilty to violating the Bank Secrecy Act, operating an unlicensed money transmitting business and breaking US sanctions law, in a resolution worth over $4 billion. Zhao pleaded guilty to failing to maintain an effective anti-money-laundering programme and resigned as chief executive¹⁰. Our explainer on KYC and AML rules describes those obligations.

What are the specific risks of BNB?

• A small validator set. Only 45 validators are active at any time, chosen by stake⁵. Fewer block producers means fewer parties would need to fail or coordinate to disrupt the chain.
• Dependence on one brand. BNB was created and sold by Binance⁹, and events affecting Binance, such as the 2023 cases, can affect confidence in the token.
• Rules set by the project. The Auto-Burn formula has already been adjusted³, and validators set the gas-burn ratio¹.
• Platform risk. The SEC has warned that crypto platforms may lack investor protections that regulated markets provide¹¹.

What mistakes do beginners make with BNB?

Before moving any BNB, read our guide to wallets and keys: whoever controls the key controls the funds.