Journal Entry: Angela Brady-Williams-12/02/2024

Journal Entry

1. BNB’s Evolution from an ERC20 Token to Native Currency
BNB’s transition from an ERC20 token on the Ethereum blockchain to the native token of the Binance Smart Chain (BSC) represents significant trends in the cryptocurrency space, including:

– Decentralized Finance (DeFi) Expansion: As DeFi gained traction, many platforms sought to create their own blockchains to enhance scalability and reduce transaction costs. BNB’s move to its own blockchain (BSC) allowed Binance to support a broader range of DeFi applications and foster an ecosystem that could handle high throughput.
-Interoperability and Layer 2 Solutions: The shift reflects the broader trend of seeking solutions that improve transaction speed and lower fees. Binance Smart Chain was designed to offer lower fees and faster transactions compared to Ethereum. This trend is echoed in various projects that aim to overcome Ethereum’s scaling challenges.
– Increased user of Native Assets: Many successful projects have developed their own native tokens to facilitate transactions and governance of their ecosystems. BNB’s transition showcased the growing importance of native cryptocurrencies within their ecosystems, allowing them to gain more utility and function beyond mere speculative assets.

2. BNB’s Utility within the Binance Ecosystem and Beyond
BNB’s utility contributes significantly to its value in several ways:

– Transaction Fees: Users can pay trading fees on the Binance exchange using BNB, often at a discounts. This incentivizes the use of BNB, driving demand as users prefer to save money on transactions.
– Token Launches and Listings: BNB is used in Binance Launchpad projects, allowing users to participate in new token offerings. This creates additional demand as users need to hold BNB to invest in these projects.
-Decentralized Applications (dApps): BNB serves as a fuel for transactions on the Binance Smart Chain, where developers can create dApps, This utility drives usage and maintains active demand for the coin.
-Staking and Yield Farming: Beyond the Binance exchange, BNB can be used for staking and yield farming in various DeFi platforms, providing multiple avenues for investors to earn rewards, thereby increasing its overall appeal.

3.Impact of Regular Token Burns on BNB’s Value
The regular token burns implemented by Binance is a deflationary mechanism that has several effects on BNB’s value:

-Reduced Supply: By periodically reducing the total supply of BNB through token burns, Binance creates scarcity. As deman remains constant or increases, a reduced supply can lead to an increase in price, benefitting existing holders.
-Investor Confidence: Regular burns my enhance investor confidence in the token. Investors often appreciate mechanisms that demonstrate the commitment of the platform to maintaining value and managing supply effectively.

Thanks
Angela

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