- BNB Auto-Burn is replacing Binance’s BNB Quarterly Burn. The goal is to give the BNB community more transparency and predictability.
- The new technology termed “BNB Auto-Burn,” will have two features, as per the official blog post. It will be objective and verifiable. It will not depend on revenue earned from the use of the native token on Binance’s centralized exchange.
- Instead, the burn amount will be changed automatically based on the price of BNB.
Crypto exchange Binance has stated that the BNB Auto-Burn feature will be implemented immediately in the Binance Smart Chain (BSC) and BNB communities’ best interests.
The goal is to give the BNB community more transparency and predictability.
Together with the Binance Smart Chain (BSC) and Binance Coin (BNB) communities, BNB Auto-Burn aims to support the development of a “healthy blockchain ecosystem.”
Currently, BNB is the native coin that powers Binance Smart Chain transactions (BSC). In simple terms, BNB fuels transactions on BSC. This is very similar to the gas cost that Ethereum users pay. In addition, BNB is required to engage in BSC’s decentralized on-chain governance.
According to the official blog post, the new technology, branded “BNB Auto-Burn,” will have two features. First, it will be factual and observable. It will not rely on revenue earned from using the native token on Binance’s centralized exchange.
BNB is also required to take part in BSC’s decentralized on-chain governance. BSC is neither controlled nor operated by Binance.
BNB is widely used and accepted as a means of payment by many different exchanges and businesses, in addition to on-chain transaction fees and usage. Binance is one of them, but it cannot control who can buy BNB or how they are used.
For the time being, the Binance blockchain uses two major BNB token-burning processes. Since implementing BEP95, a portion of the BSC gas fee has been burned in real-time. Since its Bruno upgrade last month, BSC has burned 860 BNB tokens every day.
Furthermore, Binance burns BNB tokens every quarter, with the most recent quarter eliminating 1,335,888 BNB from circulation. BNB Auto-Burn will now take the place of the quarterly burn.
BNB Auto-Burn will be objective and verifiable, independent of revenues generated on the Binance CEX through the use of BNB, and will be self-adjusting in that the burn amount will be based on the price of BNB, which reflects supply and demand for BNB, as well as the number of blocks produced during a quarter calculated using on-chain data. The following is the formula:
The amount of BNB to be burned is denoted by the letter B. The total number of blocks created on BSC in a calendar quarter is N. 1 P represents the average BNB/USD exchange rate. 2 K is a price anchor with the same value, starting with 1000. 3 BNB Auto-Burn will be disabled whenever the total number of BNB in circulation falls below 100 million.
For a range of BNB average prices, the chart below displays the projected quarterly BNB Auto-Burn amount. The estimated burn amount based on the following calculation will be publicly known after BNB Auto-Burn is implemented.
When you switch to this new BNB auto-burn option, the quantity of BNB burned will no longer be determined by Binance’s profit. However, it will be determined by the price of BNB and the level of BSC activity.