What is Binance Coin
Binance Coin is the token of the Binance cryptocurrency exchange, used to pay trading fees, as well as during IEOs on the Binance Launchpad and for farming on the Launchpool platform.
History of Creation $BNB
Binance Coin was launched in 2017 before the launch of the Binance cryptocurrency exchange. During the initial coin offering (ICO), the token price was 1 ETH for 2700 BNB or 1 BTC for 20,000 BNB. Initially, the token operated on the Ethereum blockchain and was an ERC-20 standard token, with a total supply of 200 million, half of which was distributed during the ICO.
Now Binance destroys part of the tokens through a quarterly burning procedure. As a result of the last 28th quarterly token burn, 1.644 million BNB worth $971 million were removed from circulation. The goal is to reduce the supply to 100 million to maintain the asset's price.
Coin Burning $BNB
Binance employs two burning mechanisms aimed at reducing the total supply by 50%. This creates a deflationary effect that supports the cryptocurrency's exchange rate. The first BNB burning mechanism destroys part of the coins spent as fees on the Binance Smart Chain, while the second involves quarterly burns.
Initially, the amount $BNB calculated for quarterly burns was related to the trading volumes of the token on Binance. However, since 2021, the mechanism has changed — since then, it adjusts the number of coins based on their price and the number of blocks produced on BSC each quarter.
Burning is the irreversible removal of coins from circulation, which reduces the total supply. Such coins can no longer be used for trading or any other purposes. As a result of burning part of the supply, the asset becomes scarcer, which positively affects its value, provided that demand remains. The supply of BNB will continue to decrease until it reaches 100 million.