You have probably been hearing a lot about Binance in headlines recently. From their 8+ million users to the launch of their $1 billion investment fund, they’ve been busy to say the least. The exchange raised $15 million in July 2017 and, by December 2017, already garnered 1.5 million users. Within a month, Binance’s user-base jumped to more than 5 million.

They proved their LaunchPad product works effectively by putting it to the test it in December 2017 with the breadwallet and Gifto Official ICO’s filling up within seconds. Millions of dollars filled within seconds. This was demonstrated over 6-months ago and I’m positive Binance Labs has been building a pipeline of projects ever since.

To add to their impressive growth spurt, in less than 12-months the blockchain startup surpassed 148 year-old Deutsche Bank in quarterly profits.

The goal of this article is to help you understand the utility function of tokens as applied to a business model, using Binance as an example since they are undoubtedly the most successful at implementing a token into their business strategy. Hope you find this insightful or helpful along your journey!

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Binance Coin — Harnessing The Power of Utility

Binance’s Binance Coin (BNB) has been at the center of an innovative business model which has undoubtedly played a role in Binance’s massive growth. Through the BNB, Binance has been integrating new types of utility features as time passes, creating more demand for their native ecosystem currency.

Trading Fee Discount

At launch, the BNB token gave traders a 50% discount when using it to pay fees for trades made on the Binance exchange. This means that Binance raised capital, launched with a functional product and instantly had a practical, instantly utility to benefit users — a 50% discount (upon activation) when using their core product, the exchange.

For instance, if you purchased $100 of BTC and used BNB to pay your fees in, you would pay $0.05 in BNB instead of paying $0.10 in USDT. Also, something to keep in mind — Binance’s 0.1% pre-discount trading fee dwarfs that of major traditional trading outlets like e-trade where trades are $4.99 each!

You could trade $5,000 on Binance before you pay $5 in fees, but whether $100 or $5,000 traded on E-trade, it would cost the trader $5 per trade. Even just introducing a small percentage fee like this is innovative considering the present-day environment and barriers to adoption.

While the BNB is currently on a discount schedule, the leadership team can choose to keep the discount at 50% forever if they truly wanted/needed to in order to keep up with competitors.

Binance Community Coin of The Month Voting

What happens when companies listen to their community? Innovation. In fact, Community Coin of The Month came about from the suggestion of a Binance community member in the official slack channel to their CEO, Zhao ChengPeng.

Since then, there have been 7 competitions in which community members voted for coins to be listed to the exchange with zero fee. Each vote cast cost 0.1 BNB and each user account could only vote once per coin, but we allowed to vote for all of the coins on the list if they wanted to.

My own visual mock-up explaining Binance’s competition

Above is a sort of visual of how the Community Coin of The Month competition creates demand for BNB. There are constantly new tokens launching with capital that need to list to exchanges — this is a fun, community engaging way to get listed to the largest cryptocurrency exchange at a lower cost than paying an exchange fee while also increasing project exposure during the competition.

LaunchPad — Token Sale Participation