BNB token’s perplexing freeze functionality
When reading through BNB’s source code, I came across an interesting finding. I can only speculate about it, and am hoping the community can help figure it out.
Binance implements freeze and unfreeze methods on its BNB token contract. Now, it’s not what you may think it is — it doesn’t allow Binance to freeze users’ balances. Instead, it allows any user to freeze and unfreeze their own funds.
The freeze feature is implemented with the not-so-well-named freezeOf state variable. We can check frozen balances by querying it. The following screenshot shows the BNB token owner’s regular balance and frozen balance, denominated in BNB base units.
It shows that the team is holding around 730 million USD worth of BNB in their regular balance, and around 580 million USD worth in their frozen balance.
The reason for this feature perplexes me. I couldn’t find any mention of it in their whitepaper nor any answers from online searches. (Searches for “binance” and “freeze” variations bring up results about closed or frozen exchange accounts.)
Possible use cases I’ve considered are:
- Security: It’s an extra step (though a minor one) for someone to withdraw the funds.
- Obfuscation: An account can “hide” their balance from those who don’t know about this feature. At the very least it makes it more work to query.
Neither of these are convincing to me. If you have a better suggestion, what is it?
Reddit user Jane-Delavega has cleared this up in their comment.
From the whitepaper:
BNB Vesting Plan for the Team
Initial release: 20% (16MM)
After 1 year: 20% (16MM)
After 2 year: 20% (16MM)
After 3 year: 20% (16MM)
After 4 year: 20% (16MM)The frozen 64m BNB is the team allocation that is still vesting.
In July another 16m BNB of the team allocation will be unfrozen. The trading fee with BNB discount will also increase from 0.050% to 0.075% in July. All else being equal, this will increase Binance’s profit from trading fees. They use 20% of their profit to buyback & burn BNB until 100m BNB is removed from the circulating supply.
Mystery solved!
