Binance, currently the world’s largest cryptocurrency exchange, will replace its quarterly coin burn with BNB Auto-Burn for a better, more transparent and predictable automatic token burn mechanism for Binance’s native token (BNB).
BNB Auto-Burn will be objective and verifiable, independent of revenues generated on the Binance Centralized Exchange (CEX) through the use of BNB, and will be self-adjusting in that the burn amount will be based on the price of BNB, which reflects supply and demand for BNB, as well as the number of blocks produced during a quarter calculated using on-chain data.
“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.
The new BNB auto-burn mechanism is expected to burn around BNB 1.69 million in a quarter and will be halted when the total circulation of BNB drops below 100 million.
BNB is used to fuel transactions on the BSC, similar to how gas is used on the Ethereum network. However, Binance does not control or operate BSC, thus leaving BNB to be supported by a community of users and delegators.
Till now, Binance had two BNB burning mechanisms in place, a real-time burning of a share of fuel charges on the BSC and the opposite, a quarterly burn primarily based on Binance’s Accelerated Burn Program, which the BNB auto-burn mechanism replaces.
