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In one of its major announcements on Thursday, December 23, crypto exchange Binance announced that it will be introducing the BNB Auto-Burn feature with immediate effect in the broader interest of the Binance Smart Chain (BSC) and BNB communities.
As of now, BNB is the native cryptocurrency that fuels transactions on the Binance Smart Chain (BSC). This is pretty similar to the gas fee paid on Ethereum. Furthermore, BNB is essential to participate in the decentralized on-chain governance on BSC.
Currently, the Binance blockchain follows two major burning mechanisms for the BNB tokens. Since the introduction of BEP95, a portion of the gas fee spent on BSC gets burnt in real-time. BSC is currently burning 860 BNB tokens on a daily basis since its Bruno upgrade last month.
Furthermore, Binance burns the BNB tokens every quarter with Binance removing 1,335,888 BNB from circulation during the last quarter. Now the quarterly burn shall be replaced with BNB Auto-Burn. The official announcement notes:
Going forward, the quarterly burn will be replaced with BNB Auto-Burn to provide greater transparency and predictability to the BNB Community. BNB Auto-Burn will be both objective and verifiable, independent of revenues generated on the Binance CEX through the use of BNB, and will be automatically adjusting in that the burn amount will be based on the price of BNB, which, in turn, reflects the supply and demand for BNB, as well as the number of blocks produced during a quarter calculated on the basis of on-chain information.
How Long Shall the BNB Auto-Burn Continue?
Binance has further noted that it will halt the BNB auto-burn protocol just when the total circulation of BNB will drop below 100 million. BNB has explained the complete math behind the auto-burn in its official announcement.
Shifting to this new BNB auto-burn feature means that the amount of BNB burnt shall no longer be based on Binance’s profit. However, it will depend on the price of BNB and the level of BSC activity.
The post Binance Is Replacing Its BNB Quarterly Burn With BNB Auto-Burn, Here’s What It Means appeared first on CoinGape.
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