In December 2021, the world’s largest crypto exchange, Binance, announced the introduction of a new Binance Coin (BNB) Auto-Burn protocol to provide more “transparency and predictability” for its community.
The Auto Burn protocol automatically calculates how much BNB should be burnt based on BNB’s average dollar-denominated price throughout the quarter and the number of blocks produced on the Binance Smart Chain (BSC) over the same period.
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Although the Auto Burn protocol replaces the normal quarterly BNB burn, there is also a second burn mechanism on the BSC, which involves the real-time burning of a percentage of BNB gas fees on the chain.
Auto Burn Used to Destroy
In its first quarterly BNB Auto-Burn (or the 18th quarterly burn), Binance announced that 1.684 million BNB (worth approximately $792 million USD) has been removed from circulation. The burn represents an amount equal to 0.84% of Binance’s initial supply.
The 18th BNB Quarterly Burn. Source: Binance Chain Explorer
According to the announcement, 6296.305493 BNB was burned as a part of its Pioneer Burn Program. In addition, Binance has reassured users that 50% of its initial 200 million BNB will be burnt.
On the Flipside
- The effect of deflation has been minimal on Binance Coin (BNB), which is 32.40% below its all-time high of $690.93 as of this writing.
Why You Should Care
With a fixed supply, these token burns are aimed at making BNB a deflationary asset and could possibly increase the appeal of the Binance Coin as a store of value.
