• Brief description of BNB

BNB (Binance Coin) is a token issued by Binance exchange (Binance), and its burning mechanism has had a profound impact on the BNB price and the Binance ecosystem. Over the past few years, Binance has conducted BNB burns in a variety of ways. The destruction of BNB and its impact on price and ecosystem will be explored in detail below.

BNB is the utility token that keeps Binance Coin and the Binance Smart Chain (BSC) ecosystem functioning. The initial total supply of BNB is 200 million, which will be gradually reduced through token destruction. The burning activity will continue until 50% of the total supply is burned, which is reduced to less than 100 million BNB.

There are two ways to destroy BNB. The first is the quarterly BNB destruction event. The second is BEP-95, which destroys part of the BNB used as fuel in Binance Smart Chain (BSC).

Previously, quarterly BNB burning was based on BNB trading volume on the Binance exchange. But in December 2021, Binance announced the launch of a new BNB automatic destruction. The BNB automatic destruction mechanism will automatically adjust the amount of BNB destroyed based on the BNB price each quarter and the number of blocks produced by Binance Smart Chain (BSC). This will increase transparency and predictability in the BNB community.

BNB Auto-Burn provides an independent, auditable, and objective destruction process. This data is updated quarterly and is independent of the Binance centralized exchange. In addition to quarterly destruction, BNB Chain still uses the real-time burning (Real-Time-Burn) mechanism to destroy part of BNB Chain’s mining fees in real time.

  • Automatic destruction (total amount of BNB destroyed): 1,991,854.33 BNB

  • Approximate value in USD: ~$484,160,000

  • BNB destroyed transaction ID (TXID): View transaction

  • BNB destroyed by Pioneer Burning Plan: 747.51 BNB

  • Real Combustion (Auto Combustion - Pioneer Combustion): 1,991,106.82 BNB

This is the real data given by the official of this destruction.

  • The impact of BNB destruction

  1. The destruction of BNB can effectively reduce the supply of BNB, thereby increasing its scarcity. The amount of BNB burned by Binance in each quarter is determined based on 20% of its exchange profits. Relatively small supply often results in higher prices, as market prices are driven when supply exceeds demand. BNB’s burning mechanism means that each burn will withdraw some tokens from circulation, resulting in a reduction in the total supply. Therefore, the burning of BNB is a way to reduce supply and increase scarcity, helping to support the price of BNB.

  2. BNB burning also had a positive impact on returns for investors and holders. Some of Binance’s products, such as Binance Launchpad, allow holding a certain amount of BNB to participate in early investments in projects. The destruction of BNB can increase the collateral ratio of holders in these products, thereby increasing their returns. Higher mortgage rates can bring more return opportunities and attract more investors to participate in the BNB ecosystem, thereby promoting the development and prosperity of the ecosystem.

  3. The BNB burn also helps boost confidence in the Binance community. Binance regularly destroys BNB tokens, which is seen as a buyback action and sends a positive signal to the community and investors that Binance is committed to the development of the project. The burning action shows that Binance continues to be committed to promoting the growth of the BNB ecosystem and has a long-term sustainable development vision. This increase in confidence helps attract more users, investors and developers to join the BNB ecosystem, forming a virtuous cycle.

The impact of BNB destruction is manifold. Although the burning mechanism can increase scarcity and price, market supply and demand, the development of the entire cryptocurrency industry, and other factors will also have an impact on BNB price. Furthermore, there is no unified model that can accurately predict the relationship between BNB price and burning. The quantity and frequency of each burn will also affect the extent to which the burn affects the price of BNB.

To sum up, BNB’s burning mechanism has had a significant impact on its price and the Binance ecosystem. Burning can reduce supply and increase scarcity, thus having a positive impact on price. At the same time, the burn also improves the return opportunities for holders and increases the confidence of the Binance community. However, it should be noted that the price of BNB is also affected by other factors, so when making investment decisions, various factors should be considered comprehensively and analyzed carefully.