Binance has set the best practice for a deflationary token economy through token burning. The 22nd BNB burn is completed, with $617,696,701 worth of BNB burned.
CZ Binance early this year tweeted: “Will try to keep 2023 simple. Spend more time on less things. Do’s and Don’ts. 1. Education 2. Compliance 3. Product & Service 4. Ignore FUD, fake news, attacks, etc.”
BNB coin burn is done quarterly. The focus is to reduce BNB’s supply to 100 million. To date, about 21% of the total amount of BNB has been burned.
The quarterly burns is followed by an Auto-Burn mechanism. This mechanism which will calculate the amount of BNB that has to be burned based on the price of BNB and the number of blocks that get generated on the BNB Chain every quarter.
“Coin burning is when a certain amount of crypto is destroyed & permanently removed from circulation to reduce the supply of the crypto. To burn coins you send them to a black hole address, after which cannot be used for anything. They are burned. Destroyed. Gone forever.”
A part of the Auto-Burn process is per the BNB Pioneer Burn Program. This Pioneer program is an initiative focused on helping users who have mistakenly lost tokens when transferring their crypto. Binance will reimburse eligible users’ losses after due investigations and will burn the reimbursed amount within the quarter.
Aside from quarterly Auto-Burns, BEP-95 was introduced on BNB Chain in October 2021, which adds another deflationary aspect to BNB. With BEP-95 the network burns a fixed ratio of each block’s gas fees that validators collect.
The real-time burns will take place even after 100 million BNB has been burnt through the quarterly burn process.
BEP-95 is a Binance Evolution Proposal which introduced the real-time burning mechanism to BNB Smart Chain (BSC). Thus, making the BNB tokenomics more dynamic and decentralizing the network further.
Per BEP-95, network will burn fixed ratio of each block’s gas fees which the validators collect. Exact ratio will be determined via BSC’s governance mechanisms. Burns will take place even after BSC has reached target goal of 100 million BNB.
BNB burning reduces supply and therefore pressure is placed on coin’s price. BEP can also decrease the amount of BNB delegators and validators received. With upward price pressure, fiat value will increase, offsetting reduction in coins.
One of the users commented on scarcity stating: “If Binance (BNB) Burns to 10 Million, It is Impossible to Own 1 BNB”
Looks like No FUD all Good in Binance.
A finance graduate, Maheen Hernandez has been drawn to cryptocurrencies ever since Bitcoin first emerged in 2009. Nearly a decade later, Maheen is actively working to spread awareness about cryptocurrencies as well as their impact on the traditional currencies. Appreciate the work? Send a tip to: 0x75395Ea9a42d2742E8d0C798068DeF3590C5Faa5
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