Binance and BNB, founded by Changpeng Zhao (CZ), launched in July 2017 and quickly rose to dominance as the top centralized exchange (CEX) in the industry.
BNB was first launched as an ERC-20 token on the Ethereum network. However, by 2019, it migrated to the Binance Chain, which was built on Cosmos Tendermint. However, this chain was largely used only for governance, voting, and validation. As decentralized finance (DeFi) picked up in the DeFi summer of 2020, Binance launched their second blockchain, the Ethereum Virtual Machine (EVM) compatible Binance Smart Chain (BSC), in September 2020.
In February 2022, Binance announced the rebranding of Binance Chain and Binance Smart Chain to BNB Chain, which stands for “Build and Build.” The layer-1 or underlying blockchain for Binance is being relaunched as part of a strategy to connect it to the protocol’s governance token, BNB, in order to strengthen and further decentralization.
Binance CEO CZ said:
“People always think of BSC as part of Binance because it carries the company’s name. We’ve done a lot of work to decentralize it and hope to make BNB go beyond Binance.”
To date, Binance has invested more than $1 billion to support the growth of the BNB Chain ecosystem. The latest development is the launch of its very own layer-2 scaling solution, opBNB, built on Optimism’s OP Stack.
What Is BNB Chain?
BNB Chain is an Ethereum Virtual Machine (EVM) compatible blockchain, designed to support smart contracts in order to compete with the Ethereum blockchain, which is the leading blockchain for DeFi applications.
After the rebrand, BNB Chain comprises: BNB Beacon Chain (previously Binance Chain), used for governance; and the BNB Smart Chain (BSC) (previously Binance Smart Chain), an EVM-compatible chain providing consensus.
The chain offers a lower transaction fee and higher transaction speed environment to DeFi users, while enabling developers to easily expand or migrate their decentralized applications (DApps) to the new chain. The familiar environment also allowed aspiring developers to quickly set up shop without having to compete directly with the already established protocols on Ethereum. This proved to be true as new protocols such as PancakeSwap, Venus, ApeSwap, and Alpaca Finance emerged and dominated the chain.
Coupled with the backing and support from Binance, the BNB Chain quickly grew in popularity, seeing the total value locked (TVL) on the chain growing exponentially on the tailwinds of DeFi Summer. BNB Chain is currently third with $3.38B in TVL, behind just Ethereum ($25.95B) and Tron ($5.66B).
OpBNB: A New Era of Scalability
In 2022, Layer 2 (L2) solutions began to gain traction, as developers and users began to recognize scalability as a real problem for monolithic blockchains, which at that point, were most of the leading Layer 1 chains. Rollups built on Ethereum such as Arbitrum and Optimism gained significant attention, quickly rising to become popular ecosystems in the DeFi space. BNB Chain made an announcement in June 2023 to introduce their very own L2 solution, opBNB, in a move to further scale BSC.
OpBNB is designed based on the Optimism OP Stack, an open source codebase, with modifications to meet the needs of BSC. OpBNB adopts the Optimistic rollup architecture, abstracting the execution layer into its own layer, while the remaining blockchain functions are handled by the L1, in this case, the BNB Smart Chain. The opBNB layer processes transactions off-chain and posts transaction data back onto the L1 as calldata, enabling higher transaction speed and lowered gas fees for users on the L2. Just like other rollups, opBNB uses the gas token of the L1 chain, which is the BNB token.
Building on the OP Stack, opBNB introduces optimizations in data caching, block mining, and to the derivation layer to meet their needs.
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