Binance Burns $792M in BNB
The token burn reduced the Binance Coin supply by 1.68 million BNB.
Key Takeaways
- Binance has executed its 18th quarterly coin burn, reducing the supply of its Binance Coin (BNB) token.
- This most recent burn used a new "Auto-Burn" system to determine the amount of coins to be destroyed.
- The price of BNB has been only moderately affected in the hours following the coin burn after prices began at $471.
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Binance has carried out its 18th coin burn, reducing the supply of its Binance Coin (BNB) by 1.68 million.
Binance Burns 1.68 Million BNB
On Monday, Jan. 17, Binance said that it had burned over 1.68 million BNB, an amount worth approximately $792 million at current market prices.
Binance reminded users that it has committed to removing half of the total supply of BNB from circulation, or 100 million of the 200 million tokens that initially made up the supply. Today’s burn represents an amount equal to 0.84% of Binance’s initial supply.
Coin burns such as this one are meant to reduce the supply of a cryptocurrency and keep prices reasonably high by creating more demand for the tokens already in circulation. Burns are carried out by sending tokens to an inactive address.
This coin burn is the 18th quarterly burn since Binance began to undertake the practice beginning in 2017.
New Auto-Burn Model
This quarter’s burn was also the first to use a new “Auto-Burn” formula, which automatically calculates the burn amount on market prices and the number of blocks produced by Binance Smart Chain.
This new model is meant to be more objective than the previous one. Binance CEO Changpeng Zhao said that the new model will provide “greater autonomy, transparency, and predictability.” The new model was decided upon after feedback from the community.
Previously, Binance says, burn amounts were decided based on the usage of BNB and revenue generated by Binance’s exchange. BNB’s last quarterly burn, its 17th, accounted for the removal of 1.34 million BNB from circulation. Other burns have ranged in size from 808,000 BNB to 3.6 million BNB.
Prices Only Affected Moderately
News of the coin burn has had only a very moderate effect on BNB prices so far. Binance performed the transaction for the burn at 08:14 a.m. PST on Jan. 17, when BNB was priced at $471.
The price of BNB briefly rose to $478 at 12:00 p.m. PST, representing a price increase of approximately 1.5%. At press time, BNB was trading at $474. It is possible that prices will be affected more significantly in the long term as trading continues to take place.
Binance Coin (BNB) is currently the third-largest cryptocurrency on the market, with a capitalization of $78 billion.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and other cryptocurrencies.
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