In this article, we will review what quarterly BNB burns, and how many BNB have been burned so far. Let's dig in.
Binance BNB Burn Explained: How Does It Work?
Many projects introduce a deflationary mechanism in their tokenomics. This is typically accomplished in large part through a process known as a token burn. Without a doubt, Binance is the most well-known industry player when it comes to removing chunks of its native crypto ( Binance Coin - BNB), and how they do it has changed over the course of its five-year existence.
To date, the exchange has burnt BNB worth billions of dollars in an effort to cut the token's supply overall by half. In this article, we take a deep dive at how the process works, and how many burns have been so far.
BNB Quarterly Auto-Burn
The team established the initial quarterly burning mechanism based on the BNB trading volume and the fees Binance made from it when the company first launched. However, arguing that it lacks sufficient transparency and predictability, the company switched it to process a quarterly auto-burn process.
The new method, incorporated in December 2021, allows on-chain automatic calculations to determine how much of the token has to be burned based on its price and the number of blocks generated on the BNB chain during that quarter. Essentially, if BNB's price drops, the amount of burned tokens will increase to remain within the supply-demand dynamics.
Binance promises that the quarterly auto-burn is “both objective and verifiable, independent of revenues generated on the Binance CEX through the use of BNB.”
BEP-95 and Burning BNB Through BNB Chain
The original plan, which has not changed, called for a target of 100 million tokens to be burned and a cap on the total supply of BNB at the same number of coins. However, Binance had to make a number of adjustments along the way. More specifically, the company described new processes that sped up the burning of BNB in addition to the aforementioned auto-burn.
Real-time burning was added to the BNB Chain in November 2021 as a result of the Binance Evolution Proposal (BEP) 95. It permits the smart contract to automatically burn some of the gas fees obtained from each block by validators (produced on an average at every 3 seconds).
This means that the more people use the BNB chain, the more BNB will be burned. A Twitter account that follows the number of BNB burned shows that over 106,000 BNB have been removed from circulation through this mechanism as of the end of July 2022, with an average speed of approximately 285 BNB per day.
It's worth noting, though, that the BEP-95 burning mechanism will continue even after the 100 million token mark is reached as it depends on the BNB Chain network.
How Many BNB Have Been Burned So Far?
As previously said, Binance's ultimate goal is to reduce the circulating supply by 50% starting from 200 million BNB in 2017. The company has executed 20 of the scheduled quarterly auto-burns in addition to the daily burning mechanism, which has taken 106,000 out of circulation thus far.
Based on events that occurred in the Binance ecosystem during Q2 2022, the most recent occurred earlier in July and resulted in the burning of 1,959,595.29 BNB. When estimated using the pricing on July 13, this sum came to $444 million.
The amount of BNB that has been consumed overall as of this writing is slightly under 39 million, which means that there are still over 161 million BNB in circulation. The next burning event will be after the end of Q3, and so far, the estimates show that more than two million BNB will be removed.
Hopefully, reading this article, "Binance BNB Burn Explained: How Does It Work And How Many BNB Have Been Burned So Far?" can help you to understand it better.
