Binance Autoburns 1.6M BNB Tokens• January 29, 2022 2:18 pm • Comments
Binance recently announced its first ever auto-burn where it removed about 1.6M BNB tokens from the total supply of BNB tokens in the network.
The 1.6M tokens totaled about $750 million that was removed from the circulating supply which would make the value of each BNB token supposedly worth more.
The way the number of tokens to be burned is decided using a specific formula that is based on the total number of blocks that is created from the Binance Smart Chain as well as the average price of the BNB token for the quarter.
The Binance Smart Chain is a blockchain that allows for the implementation of smart contracts and runs alongside the main Binance Chain.
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The move away from the previous token burn methodology, which was based on revenue generated from the Binance centralized exchange, is expected to make the process more objective and clear to the BNB community.
“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,” Changpeng Zhao, co-founder and CEO of Binance, said in an official announcement published on the Binance blog.
Binance is committed to destroying 100 million BNB tokens, amounting to 50% of the circulating supply, through quarterly burns.
According to data source Coin Tools, the exchange has destroyed nearly 35 million tokens via quarterly burns to date, having begun the program in late 2017.
Cryptocurrency exchange Binance implemented its first-ever #Binance token $BNB auto-burn program last quarter. As per the Auto-Burn procedure, it removed over 1.6M $BNB worth $750M from circulation. The latest quarterly burn included an additional 6,296.30 #BNB.#CryptoNews
— Crypto_Johnny (@crypto3_johnny) January 19, 2022
The purpose of these auto-burns that are conducted on a regular basis is supposedly to help reinforce the token as a store of value and makes the price deflationary.
This is typically very attractive for investors as it provides a solid foundation for the price to increase long term and makes it an attractive alternative hedge against the inflation that is usually experienced by fiat currencies like the USD.
This is not the first burning event that Binance has enacted for the coin, however.
The firm has previously already done 17 burn processes, but this was the first time where the burn was done automatically.
After the burn was done, it was observed that there was no noticeable immediate effect to the price of the token as prices show that BNB was continuing to trade flat at around $474.
This may make sense as the effects are usually slow and are not reflected long term as well as the fact that the burn is still a very small percentage of the total circulating supply.
The famed cryptocurrency exchange Binance is still the largest exchange in the world by volume and is continuing to expand in many regions.
The deflationary mechanism and the continued growth of the firm are positive contributing factors for the growth of the BNB coin and marks good news for BNB investors.
In its First-Ever Auto Burn, Binance Destroys 1.68 Million BNB Tokens https://t.co/5KVGW6GCsK
— Robert Zayas MD (@RobertZayasMd) January 21, 2022
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