Binance is dropping its current quarterly coin burn mechanism for a better, more transparent, and predictable BNB auto-burn mechanism.
“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.” A Thursday announcement by the crypto exchange read.
According to the announcement, the move came as a result of increased demand for a healthier blockchain system from BSC users and BNB communities.
Just like gas on the Ethereum network, BNB is Binance’s native token and is used to fuel transactions on the Binance Smart Chain. Binance does not however control or operate BSC thus leaving BNB to be supported by a community of users and delegators. This independence is thus a major pointer as to how the recent changes were arrived at.
To date, BNB utilizes two burn mechanisms. First, there is the BEP95 model that carries out a real-time burning mechanism on a portion of gas fees spent on BSC. This model has seen approximately 860 BNB burnt every day since the Bruno upgrade in late November.
Secondly, Binance has been burning BNB every quarter. The last such burn saw 1,335,888 BNB permanently removed from circulation reducing the total BNB supply from approximately 168,137,036 BNB to 166,801,148.
New Auto Burn To Be Driven By BSC Activity
The introduction of the new auto-burn mechanism means that the amount of BNB burned will no longer be based on Binance’s profit, but will depend on the price of BNB and the level of BSC activity. Furthermore, the new BNB auto burn will enhance the level of transparency and predictability of the BNB community when conducting transactions.
“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 further reads.
The new BNB auto burn mechanism is expected to remove about 1.69M BNB in a quarter and will be halted when the total circulation of BNB drops below 100 million.
