Binance Chain is a seamless and secure blockchain platform that powers the Binance DEX, a decentralized exchange that allows users to trade crypto assets directly without intermediaries.
On the other hand, Binance Smart Chain is a parallel blockchain that enables smart contracts, decentralized applications (DApps), and decentralized finance (DeFi) protocols. Both blockchains are compatible with each other, but they have different features and advantages. So how can users transfer value and access services across both blockchains? The answer is a wrapped BNB token.
Table of Contents
What is wrapped BNB token?
Wrapped BNB token (WBNB) is a BEP-20 token representing BNB on Binance Smart Chain. It is backed 1:1 by BNB, which is stored by a smart contract on Binance Chain. Users can convert their BNB to WBNB and vice versa through the Binance Chain Wallet or other supported wallets. WBNB was launched in September 2020 by Binance to connect Binance Chain and Binance Smart Chain.
Price Journey
WBNB’s price has followed the price movements of BNB closely, as it is pegged to it at all times. WBNB reached its all-time high of $730.41 on May 12, 2021, the same as BNB. Today, WBNB is worth around $312.31 , an 1178% increase from its all-time low of $25.09 on December 9, 2020.
The performance of the Binance ecosystem also affects the price of WBNB. For instance, if Binance is growing and innovating rapidly, it will attract more users and value to its platforms.
Current Price Analysis
The price increased by 0.15% in 1 day. The current price is $312.31 per WBNB. Wrapped BNB is 57.24% below the all-time high of $730.41. The current circulating supply is 3,479,369.467 WBNB with a market cap of $1.1 billion. Let’s have a look at the chart for trend analysis:
In a 6-hour time frame, the price is moving inside the descending triangle. we have to wait for a successful breakout or breakdown to confirm the next move of $WBNB.
Benefits of BNB token
Wrapped BNB token allows users to use their BNB on both Binance Chain and Binance Smart Chain, as well as other blockchains that support BEP-20 tokens. This opens up a world of possibilities and advantages for crypto users, such as:
- Accessing DApps and DeFi protocols on various blockchains. For instance, WBNB users can use their BNB on Binance Smart Chain DApps and DeFi protocols, such as PancakeSwap, Venus, BakerySwap, and more. They can also use their WBNB on other blockchains that support BEP-20 tokens, such as Ethereum, Polygon, Solana, etc.
- Leveraging the speed and security of one blockchain and the functionality and innovation of another blockchain. For instance, WBNB users can enjoy the speed and security of Binance Chain, as well as the functionality and innovation of Binance Smart Chain.
- Diversifying their portfolio and hedging their risks easily by switching between different assets and platforms. For instance, users can convert their volatile cryptocurrencies to stablecoins or vice versa using WBNB. Users can switch between blockchains depending on their preferences and need using WBNB.
What are some challenges and limitations of wrapped BNB token?
Wrapped BNB token has challenges and limitations. Some of them are:
- Trusting the smart bridge contract that holds the underlying BNB. For instance, WBNB users must trust the bridge smart contract, which could have bugs or vulnerabilities, to reflect the value and supply of BNB1 accurately.
- Incurring additional fees and risks associated with cross-chain transactions and conversions. For instance, users must pay fees for sending their BNB or WBNB to the bridge’s address and receiving WBNB or BNB on another blockchain1. Users also risk losing their funds due to technical issues or malicious attacks during the conversion process.
Conclusion
Wrapped BNB token is an innovative way to bridge the gap between Binance Chain and Binance Smart Chain. It has many use cases and advantages for crypto users who want to enjoy the benefits of both blockchains. Its drawbacks and limitations stem from its reliance on smart contracts and pegging mechanisms.
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