Binance Completes 17th Quarterly Burn of BNB Token

1,335,888 $BNBs was taken out of circulation forever, the largest ever burn, in terms of value by Binance

By
Chung Yee
on
October 20, 2021
Category:
Blockchain News

Deflationary Mechanism

Binance carried out its 17th $BNB burn, a whopping $640 million in value in its quarterly token burn. In comparison, the previous token burn only amounted to $390 million in value then. 

The transaction ID (TXID) for the BNB burn can be found here. The recent burn has decreased the total supply from 168,137,036 BNBs to 1466,801,148 BNBs. This burn mechanism will continue every quarter until 50% of the total $BNB supply is removed from circulation. 

The burning mechanism works by using profits generated by the platform to buy back BNB tokens from the market and taken of circulation to reduce the total supply. 

Source: Binance commits to burning 50% of the total $BNB supply which is approximately 100 million $BNB tokens

The burn mechanics also includes users’ lost tokens in accepted cases and counted as BNB’s quarterly token burn. This program was introduced last year in BNB Pioneer Burn Program to help eligible users recover losses made while trying out the Binance Smart Chain. 17,839 BNB tokens were burned from the BNB Pioneer Burn Program this round. 


Binance’s Growth 

Binance reports that it continues to grow and has improved its category position in the market from 69.6% in June to 69.7% in July and 70.3% in August based on the research from The Block. There is a caveat placed on the statistics because the figure is only based on a small number of exchanges that the researcher deemed as ‘legitimate’. 

According to our own research, which includes a much more comprehensive dataset - hence lowering our category position estimate - our “true” position is lower: somewhere about 50%. However, the relative proportions of the big exchanges are the same. - Binance believes its category position is much lower and believes that the industry’s growth should be the main focus. 


CZ’s Insights on Regulation

Changpeng Zhao (CZ), the Chief Executive Officer (CEO) of Binance in the same announcement gave insights into Binance’s positioning and point of view on regulation. He listed 3 reasons as to why Binance welcomes regulation. 

CZ believes that mass adoption requires regulation. 95% of the rest of the population, which he calls the ‘mass audience’ can only be bridged by having regulatory frameworks and licenses. The crypto industry is now entering this phase. Secondly, being the category leader stands in a good position to lead and influence regulation. Finally, regulation will weed out unethical and questionable practices thus promoting a healthy and robust industry. 


Effective Mechanism


Source: Burning is an effective deflationary mechanism that is adopted by many platforms

The burning mechanism is fast becoming an integral part of tokenomics. Having fewer tokens in circulation can be achieved by minting lesser tokens rather than resorting to a burning mechanism. However, the perception of the community is important. 

The community would likely view the presence of a deflationary mechanism and a gradual decrease in circulating supply as a more attractive feature to drive value. The scheduled burn also serves as a periodical reminder that the platform is profitable and the efforts taken to reduce the total supply regardless of the value of the tokens.

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Chung Yee

Chung Yee has a legal background and has been involved in research works for the legal and compliance industry. Writing is his passion, centered on topics such as the blockchain and finance. His largest crypto holdings are Solana, Ethereum, and BNB Token.

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