SEC Filing Document

Company: VanEck BNB ETF
Ticker: 
CIK: 2066824
Filing Type: S-1
Document Type: S-1
Date Filed: 2025-05-05
Accession Number: 0002066824-25-000002
Exchange: 
SIC Code: 6221
SIC Description: Commodity Contracts Brokers & Dealers
URL: https://www.sec.gov/Archives/edgar/data/2066824/000206682425000002/vaneckbnbetfs-1.htm

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charitable donations on behalf of users could hold donated funds in smart contracts that are paid to charities only if the charity satisfies certain pre-defined conditions. In total, as of December 31, 2024, more than [2,000] DApps are currently built on the BNB Chain, including DApps in the collectible non-fungible token, gaming, music streaming, and decentralized finance categories. Additionally, the BNB Chain has been used for decentralized finance ("DeFi"), or open finance platforms, which seek to democratize access to financial services, such as borrowing, lending, custody, trading, derivatives and insurance, by removing third-party intermediaries. DeFi can allow users to lend and earn interest on their digital assets, exchange one digital asset for another and create derivative digital assets such as stablecoins, which are digital assets pegged to a reserve asset such as fiat currency. As of December 31, 2024, approximately $[1.42] billion was being used as collateral on DeFi platforms.

In addition, the BNB Chain and other smart contract platforms have been used for creating non-fungible tokens, or NFTs. Unlike digital assets native to smart contract platforms which are fungible and enable the payment of fees for smart contract execution. Instead, NFTs allow for digital ownership of assets that convey certain rights to other digital or real world assets. This new paradigm allows users to own rights to other assets through NFTs, which enable users to trade them with others on the BNB Chain. For example, an NFT may convey rights to a digital asset that exists in an online game or a DApp, and users can trade their NFT in the DApp or game, and carry them to other digital experiences, creating an entirely new free-market internet-native economy that can be monetized in the physical world.

BNB

BNB is the native digital token of the BNB Chain and is used as the primary medium of exchange for transaction fees, smart contract interactions, and other network operations. BNB was initially launched as an ERC-20 token on Ethereum in 2017, but BNB migrated to Binance Chain in 2019. It became the native token of the broader BNB Chain ecosystem following the introduction of Binance Smart Chain (now BNB Smart Chain) in 2020. BNB can be staked to participate in network consensus under the PoSA mechanism, enabling validators and delegators to earn staking rewards. BNB is also used in governance processes on the BNB Beacon Chain, enabling token holders to vote on certain network upgrades and proposals. However, governance powers are currently limited in scope and largely focused on protocol-level changes. BNB’s total supply is subject to periodic ‘burn’ mechanisms designed to reduce the token’s circulating supply. These include a quarterly manual burn, historically tied to Binance’s revenue, and an automatic burn based on (a) the total number of blocks produced by the BNB Chain in a quarter, (b) the average price of BNB against the U.S. Dollar and, (c) a constant value as a price anchor.

In addition to its use within the BNB Chain, BNB has various utility functions within the broader Binance ecosystem, including as a means of payment for trading fees on Binance’s centralized exchange, participation in token sales, and access to premium features on Binance’s platform.

Market Participants

Validators

Validators range from BNB Chain enthusiasts to professional operations that design and build dedicated machines and data centers, including "clusters," which are groups of validators that act cohesively and combine their processing to confirm transactions. When a validator confirms a transaction, the validator and any associated stakers receive a fee. During the course of ordering transactions and validating blocks, validators may be able to prioritize certain transactions in return for increased transaction fees, an incentive system known as "Maximal Extractable Value" or MEV. For example, in blockchain networks that facilitate DeFi protocols in particular, such as the Ethereum Network, users may attempt to gain an advantage over other users by offering greater transaction fees. Validators less commonly capture MEV in the BNB Chain because, unlike the Ethereum Network, it does not publicly expose transactions before they are accepted by a validator. However, some efforts are underway to help BNB Chain Validators consistently capture MEV. See "—Summary of a BNB Transaction" above.

Investment and Speculative Sector

This sector includes the investment and trading activities of both private and professional investors and speculators. Historically, larger financial services institutions are publicly reported to have limited involvement in investment and trading in digital assets, although the participation landscape is beginning to change. Currently, there is relatively limited use of digital assets in the retail and commercial marketplace in comparison to relatively extensive use by speculators, and a significant portion of demand for digital assets is generated by speculators and investors seeking to profit from the short- or long-term holding of digital assets.

Retail Sector

The retail sector includes users transacting in direct peer-to-peer BNB transactions through the direct sending of BNB over the BNB Chain. The retail sector also includes transactions in which consumers purchase goods and services from commercial or service businesses through direct transactions or third-party service providers, although the use of BNB as a means of payment is still developing and has not yet been accepted in the same manner as Bitcoin or Ethereum due to its infancy and because BNB has a different purpose than Bitcoin and Ethereum.

Service Sector

This sector includes companies that provide a variety of services including the buying, selling, payment processing and storing of BNB. As BNB continues to grow in acceptance, it is anticipated that service providers will expand the currently available range of services and that additional parties will enter the service sector for BNB.

BNB Protocol Development and Modifications

Concurrent with the launch of the Binance’s exchange in July 2017, Binance or its affiliates minted 200 million BNB tokens on the Ethereum blockchain using Ethereum’s ERC-20 functionality. These tokens were initially created for the purposes of allowing the holder of BNB to pay for fees incurred from the use of the Binance exchange as well as serving as an exchangeable asset for other digital assets trading on the Binance exchange. After creation, Binance issued the 200 million BNB as follows: 10% (20 million BNB) to angel investors in Binance Ltd., 40% (80 million BNB) to the founding employees of Binance Exchange subject to a 4 year schedule, and 50% (100 million BNB) in what the BNB white paper termed an “ICO” (an abbreviation of ”Initial Coin Offering) in exchange for Ethereum (ETH) or the equivalent Ethereum price in Bitcoin in three consecutive tranches from July 1, 2017 to July 21, 2017.

According to the terms stated by Binance in their whitepaper and subsequent communications associated with the creation and issuance of BNB, the 200 million BNB initially created would be the maximum BNB to exist. In addition, Binance also implemented a deflationary program whereby Binance, in its discretion and not through an on-chain mechanism, would purchase BNB tokens in the open market and then destroy these BNB (known as “burning”) on a quarterly basis. The amount of BNB burned was set at the US dollar equivalent of 20% of Binance Exchange profits in that quarter. The maximum amount of BNB to be burned is capped at 100 million, reducing the maximum BNB in existence to 100 million.

In March of 2019, this program was revised such that (a) the BNB burned would be sourced from the Binance treasury and (b) the amount of BNB to be burned would be determined by an undisclosed percentage of trading volume on the Binance DEX. In October of 2021, the BNB Chain added an additional BNB burning mechanism (the “Real-Time” mechanism) that burns BNB tokens at a fixed ratio to the gas fee collected by validators for each block. In January of 2022, the burning program was adjusted again such that the amount of BNB to be burned on a quarterly basis would be determined by an algorithm using the inputs of (a) the total number blocks produced by the BNB Chain in a quarter, (b) the average price of the BNB token against the US Dollar and, (c) a constant value as a price anchor (the “Auto-Burn” mechanism). The Auto-Burn mechanism supplants the previous methodology for determining the amount of BNB burned on a quarterly basis. The Real-Time burning methodology remains in place in addition to the quarterly burns.

Binance’s overall target burn of 100 million BNB remained unchanged. In addition, to the Real-Time burning mechanism, Binance has conducted 18 consecutive quarterly BNB burns since inception, removing, in total, 35,315,591.20 BNB. As of March 14, 2022, the total outstanding BNB is 164,684,408.98