Wrapped BNB (WBNB) is a tokenized version of Binance Coin (BNB) on the BNB Smart Chain (BSC) that conforms to the BEP-20 standard. Its primary purpose is to enable BNB to be used within decentralized applications (dApps) and decentralized finance (DeFi) protocols on the BSC network.

Overview

Wrapped BNB functions as a wrapped token, meaning its value is pegged 1:1 to the value of the underlying asset, which in this case is BNB. This wrapping process makes BNB compatible with the BEP-20 token standard used on the BNB Smart Chain, allowing it to interact with smart contracts and participate in activities like trading on decentralized exchanges (DEXs), yield farming, and lending protocols.

The creation of WBNB addresses the limitation of the native BNB token, which was initially designed primarily for use on the Binance Chain for trading and exchange functions. By wrapping BNB into WBNB, its liquidity can be utilized across different blockchains and within the BSC ecosystem's DeFi applications. ^{[1] [2] [3] [4] [5] [6] [7]}

History

Wrapped BNB was introduced as part of the Binance platform's expansion, particularly with the launch of the Binance Smart Chain (later rebranded to BNB Smart Chain) in September 2020. The concept was announced by Changpeng Zhao, the founder and CEO of Binance. The development aimed to enhance the functionality of BNB beyond simple cryptocurrency trading and enable its use in the growing DeFi space on BSC. ^{[1] [2]}

Technology

WBNB operates on the BNB Smart Chain and adheres to the BEP-20 token standard. The BEP-20 standard is a technical specification for tokens on BSC, similar to Ethereum's ERC-20 standard, which defines how tokens are spent, how they are authorized to be spent by another contract, and how they interact with other tokens and dApps.

The process of converting BNB to WBNB is known as "wrapping," and converting WBNB back to BNB is called "unwrapping" or "redeeming". This conversion typically involves using a bridge service or a smart contract that locks the original BNB on the native chain and issues an equivalent amount of WBNB on the BNB Smart Chain. Custodians, which can be smart contracts or multi-signature wallets, are involved in managing the locked assets. ^{[1] [2] [3] [4] [5] [6] [7]}

Use Cases

WBNB serves several key functions within the BNB Smart Chain ecosystem and beyond:

• DeFi Participation: WBNB allows users to engage with various DeFi protocols on BSC, including decentralized exchanges (DEXs) like PancakeSwap, lending platforms like Venus and Aave, and yield farming applications. ^{[1] [4] [5] [6]}
• Cross-Chain Transactions: By being a wrapped token, WBNB facilitates the movement and use of BNB's value on different blockchain networks that support wrapped tokens and cross-chain bridges. ^{[1] [2] [5] [6]}
• Liquidity Provision: WBNB is used in liquidity pools on DEXs, allowing users to earn fees by providing WBNB and other tokens for trading pairs. ^{[1] [4] [6]}
• Smart Contract Interaction: As a BEP-20 token, WBNB can interact with complex smart contracts, enabling its use in a wide range of dApps. ^{[1] [4]}
• Developer Use: Developers can utilize WBNB when building protocols, digital assets, and NFTs on the BNB Smart Chain. ^[1]

The wrapping of BNB into WBNB offers several benefits:

• Interoperability: Enables the use of BNB's value on blockchain networks other than its native chain, particularly within the BNB Smart Chain ecosystem. ^{[1] [2] [4] [5] [6]}
• DeFi Access: Provides access to the diverse range of DeFi applications and services available on BSC. ^{[1] [4] [5] [6]}
• Ease of Conversion: The process of exchanging BNB for WBNB and vice versa is designed to be straightforward and quick. ^{[1] [4] [5] [3]}
• Cost-Effectiveness (for large transactions): While wrapping/unwrapping incurs gas fees, using WBNB for transactions within BSC can be more cost-effective than transacting the native asset on its original, potentially more expensive, network for certain use cases. ^[2]
• Enhanced Security (via private key control): Once wrapped, the user controls the private key for the WBNB token, which is separate from the native BNB asset held by the custodian. ^[2]

Team

Wrapped BNB was created in connection with the Binance platform, which was founded by Changpeng Zhao. Changpeng Zhao is a Chinese-Canadian entrepreneur known as the founder and CEO of Binance. ^[2]