Demand for BNB is generated from three main sources: a desire for lower trading fees, speculation, and coin burns. Since Binance has a whopping $1.6 billion 24 hour trading volume, the demand for lower trading fees is significant. Binance also conducts a quarterly coin burn. A coin burn is an event where the issuer of a coin sends some of those coins to a public address whose private keys are unobtainable, so the coins can never be spent -- functionally destroying the coins. Coin burns usually result in an increase in price, since the supply shrinks while demand stays the same. This is especially true if the issuer is buying back coins in order to burn them, which is exactly what Binance is doing. We’ll will hold off on providing a model for valuating BNB since it’s beyond the scope of this article, but the main takeaway here is that investors have more visibility into the actual valuation of the coin since it’s directly tethered to an active business.

In total, there have been 200 million BNB coins created. Initially, these coins were used as a fundraising vehicle for Binance. Although not officially considered investors in the exchange, early owners of BNB were holders of an asset with an appreciation rate proportional to the growth of the exchange. Binance promised to use 20% of their profits each quarter to buy back BNB until 100 million BNB coins were burned. In the first quarter, Binance bought back (and burned) 986,000 BNB and in the second quarter, it was 1,821,586 BNB coins. It's been almost 3 months since the second quarterly burn and the third burn is just around the corner.