Binance aims to provide greater transparency and predictability to the BNB community.
Coin burning is a mechanism through which altcoin creators control circulation
Photo Credit: Binance
Binance, the cryptocurrency exchange which is currently the largest in the world has decided to drop its quarterly coin burn mechanism for a better, more transparent, and predictable token auto-burn mechanism for BNB, Binance's native token. According to the announcement, the move came as a result of increased demand for a healthier blockchain system from Binance Smart Chain (BSC) users and BNB communities. Until now, Binance had two BNB burning mechanisms in place, a real-time burning of a percentage of gas fees on the BSC and the other, a quarterly burn based on Binance's Accelerated Burn Program, which the BNB auto-burn mechanism replaces.
"We've been listening closely to the Binance Smart Chain (“BSC”) and BNB communities-and we are proud to announce the implementation of a new BNB Auto-Burn procedure effective immediately," Binance stated in a blog post.
Coin burning is a common mechanism through which altcoin creators control the supply of tokens in circulation. In most cases, including Binance, the process removes from circulation BNB tokens by sending them into an inaccessible wallet. The burning process will be both verifiable and objective, following the deployment of the new system.
Similar to gas on the Ethereum network, BNB is Binance's native token and is used to fuel transactions on the Binance Smart Chain. However, Binance does not control or operate BSC, thus leaving BNB to be supported by a community of users and delegators.
The change also means that the amount of BNB burned will no longer depend on Binance's profit but on the price of BNB and the level of BSC activity. As mentioned, the change also aims to enhance the level of transparency and predictability of the BNB community when conducting transactions.
The new BNB auto-burn mechanism is expected to remove about BNB 1.69 million in a quarter and will be halted when the total circulation of BNB drops below 100 million.
“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 based on on-chain information,” the announcement states.
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