https://ift.tt/ksdxbDZ Zhao Announces That More Than 700 Million in BNB Will Be Burned

BNB Chain burns more than 1.8 million Binance coins (BNB) in its first burn of the quarter, according to the company. It is likely that this will have a substantial impact on the price of this coin.

Changpeng Zhao tweeted about the burn:

“$741,840,738 worth of #BNB will be taken out of circulation soon. Real time info: https://bnbburn.info. #BNB is deflationary. If you don’t know what that means, you lack basic financial knowledge to get lucky in this world. Harsh but true. Time to learn.”

BNB is the native coin of the BNB Beacon Chain and BNB Smart Chain, and it fuels the BNB Chain ecosystem. Binance, a cryptocurrency exchange, issued it following its ICO in 2017.

Why Burning?

To lower its total supply to 100,000,000 BNB, BNB uses an auto-burn method. Based on the price of BNB and the number of blocks generated on the BNB Smart Chain (BSC) during the quarter, the auto-burn mechanism modifies the amount of BNB to be burned.

The 19th quarterly BNB burn, which saw 1,839,786 tokens removed from circulation, destroyed approximately $778 million worth of BNB. The most recent quarterly BNB burn was the second to employ the Auto-Burn model, which was implemented in January of this year. The wallet where the tokens were burnt currently has 16.4 million BNB, which is about $7 billion.

The tokens burned in the most recent BNB burn have a USD worth that is comparable to the tokens burned in the 18th quarterly BNB burn. The latest burn of BNB is the largest since Q4 2020 in terms of volume.

Previously, a considerable number of BNB was burnt quarterly, but the amount depended on several business criteria reached by the Binance cryptocurrency exchange during the quarter. These quarterly burns were shifted to an Auto-Burn model in December 2021, which is dependent on variables unrelated to the Binance exchange.

In the new Auto-Burn model, the calculation that decides how much BNB is burned takes into account the number of blocks produced on the BNB Chain during the quarter, as well as the average BNB price (in USD) for the same time period.

The Auto-Burn methodology will remain in place until the BNB supply is reduced to 100 million tokens. This is in line with Binance’s original BNB whitepaper, which stated a goal of gradually halving the BNB supply from its initial 200 million tokens. Because of the real-time BNB burn mechanism that has been implemented on BNB Chain, even when the Auto-Burn model is turned off, there will still be some deflationary pressure on the BNB supply. Even once the BNB supply is decreased to 100 million tokens, a portion of the gas costs earned in each block on the BNB Chain is permanently withdrawn from circulation.