The rate of burn of Binance Coin (BNB), the native token of the Binance trading platform, and the Binance Smart Chain (BSC) will now be done automatically through a formula published by the exchange. The trading platform said the decision to switch the model for its burning program is based on community demand and feedback, and it is aimed at introducing transparency overall.
“Going forward, the quarterly burn will be replaced with BNB Auto-Burn to provide greater transparency and predictability to the BNB Community. BNB Auto-Burn will be both objective and verifiable, independent of revenues generated on the Binance CEX through the use of BNB, and will be automatically adjusting in that the burn amount will be based on the price of BNB, which, in turn, reflects the supply and demand for BNB, as well as the number of blocks produced during a quarter calculated on the basis of on-chain information,” Binance said in its official announcement.
The Binance ecosystem currently has two burning mechanisms, the first of which is the 860 BNB that is burnt on the Smart Chain network daily in the form of gas fees, as well as the Accelerated BNB Burn that is done quarterly. The 17th burning event through the latter was conducted last quarter and it saw as much as 1,335,888 BNB removed from circulation.
The auto-burn formula is based on the average price of BNB, the total number of blocks produced on BSC during the calendar quarter, and a changeable constant which is currently pegged at 1,000.
Binance Coin is One of Many Coins with Burning Mechanism In Place
The evolution of the digital currency ecosystem is one that came with the reduction in the circulating supply of ecosystem tokens. Infact, reducing supply through burning is becoming prevalent in the space and Binance Coin is one of such digital currencies with this feature.
While Bitcoin was created by Satoshi Nakamoto to have a maximum supply of 21 million, Ethereum developers redesigned the protocol to be deflationary through the EIP 1559 upgrade which went live in August. Thus far, as much as 1250138.3 ETH has been burnt, a figure that is worth approximately $4.91 billion, according to data from Etherchain. This is massive graduation from the over 200,000 recorded earlier as reported by TheCoinRise.
Burning coins is a way to increase the token’s valuation through the law of demand and supply, and Binance said it will stop the auto-burn program when its circulating supply touches 100 million BNB.