Largest Crypto exchange startup Binance launches Auto-Burn program, the procedure which would be the 18th of Binance quarterly BNB token burn of 1,684,387.11 BNB worth $783 million has been completed.
Under the new Auto-burn program, the number of tokens to be burned is arrived at using a formula based on the total number of blocks produced on the Binance Smart Chain, a blockchain with smart contracts functionalities and running parallel to Binance Chain, and BNB’s average dollar-denominated price during the quarter.
What you should know about Coin Burning
Coin burning is a mechanism used to remove coins from circulation, reducing the total supply permanently. Many cryptocurrency projects in the market today perform periodic coin burns to create a deflationary effect.
BNB adopts two coin-burning mechanisms, which will reduce its total supply by 50% in the long term. The first mechanism consists of burning a portion of the BNB spent as gas fees on the Binance Smart Chain (BSC) (introduced in the BEP-95). The second, however, consists of quarterly BNB burning events.
Previously, the quarterly BNB burns were based on the BNB trading volume on the Binance exchange. But in December 2021, Binance announced that the Quarterly Burn would be replaced by the new BNB Auto-Burn.
The BNB Auto-Burn mechanism will automatically adjust the amount of BNB to be burned based on the BNB price and the number of blocks generated on BSC during the quarter. This offers greater transparency and predictability to the BNB community.
What is a Coin Burn?
Coin Burning or Coin Burn refers to the process of permanently removing cryptocurrencies from circulation to reduce the total supply of the coin. In other words, coins are destroyed and can no longer be used in trading, swapping or anything else.
By making the coin scarcer, coin burning aims to create a deflationary effect and potentially increases the crypto’s valuation to benefit its holders. For BNB, the goal of coin-burning events is to gradually reduce its total supply until it’s under 100 million BNB in circulation.
While there are multiple ways to burn cryptocurrency, some projects implement a specific burning feature as part of their protocol. For example, BNB included a smart contract burning function when it was first launched.
With the rise of Decentralized Finance (DeFi) protocols, coin burning has become more common in the blockchain space. Ethereum (ETH) started burning the ETH base fee of all blockchain transactions after implementing the London hard fork upgrade in 2021.
To burn coins, the practice may involve the project’s developers buying tokens back from the market or burning parts of the supply already available to them.
With this, a certain amount of crypto is sent to a smart contract or wallet address that cannot be used for making transactions and has no private keys. This means that once the coins reach the address, they will be lost forever and thus removed from the available supply.
According to Changpeng Zhao (CZ), co-founder and CEO of Binance
“The implementation of the BNB Auto-Burn is a natural next step in BNB’s journey and will help the BNB community grow through providing greater autonomy, transparency and predictability.”
Facts about Binance Smart Chain
Binance Smart Chain network has surpassed 1.5 billion transactions. According to BSCScan, the daily number of transactions on the blockchain, which is about 108 million unique wallet addresses, recently surged to over 10 million, just a little below its all-time record high of 13 million back on July 29.
BNB Quarterly Burn
As of January 2022, there were 17 BNB burn events. A total of 33,199,679 BNB were burned, which represents 16.59% of the total supply.