Binance Chain executed its 21st auto-burn on October 13, resulting in the deletion of more than 2 million BNB tokens, or more than $574.8 million at the time of the transaction.
Binance deletes over 2 million BNB tokens
Cryptocurrency exchange Binance conducted its 21st auto-burn of BNB tokens yesterday morning. More than 2 million BNB were burned, or about $574.8 million at the time of the transaction.
BNB is deflationary. https://t.co/fQJs07aTIc
– CZ Binance (@cz_binance) October 13, 2022
Token burn consists of sending a certain cryptocurrency to a wallet without a private key, and thus de facto unusable. The crypto in question thus becomes rarer, since its number of units in circulation has been reduced, which mechanically increases its price. Please visit our dedicated page to learn more about the burn mechanism.
This is one of the largest token burns since the implementation of this process for the NBB. According to the release, of the more than 2 million tokens, just over 4,000 of them came from the Pioneer Burn Program, an initiative Binance set up in 2020 to “refund” people who sent tokens to a non-existent address by mistake. These tokens are then deducted from the auto-burn.
The price of BNB has risen 5.1% in the past 24 hours, following the same trend as Bitcoin (BTC), which has gained 6.6% in the same period.
Why is Binance burning its tokens
Until December 2021, Binance was burning tokens in 2 different ways. Firstly, by burning a fraction of the blockchain transaction fees (the BNB is used to pay the BNB Chain transaction fees) since the implementation of BEP-95 in October of the same year.
Secondly, via a quarterly burn taking into account the platform’s trading volumes over the last 3 months. With the addition of its auto-burn policy in December 2021, Binance wanted to focus on transparency and predictability of the amount of tokens burned. Indeed, as the equation is public, some tools such as BNBBurn allow to predict the amount of BNB burned during the next auto-burn.
This burn policy aims to make BNB a deflationary token in order to increase its price. However, these periodic burns will no longer occur once the number of BNBs in circulation falls below 100 million units, less than half of the total supply at launch.
Evolution of the number of BNB tokens burned (ordinate) and the average price of BNB (abscissa)
The 22nd auto-burn should logically take place at the end of the last quarter of the year, for an amount that is still impossible to determine precisely as the equation to determine the number of tokens to burn takes into account factors such as the number of blocks produced at that time.
