In recent news, Binance (an immensely popular crypto exchange) has just announced yet another massive token burn of its native Binance Coin (BNB). This is the 16th Binance Coin token burn in the exchange’s history, and it has now burned nearly 1.3 million tokens which are collectively worth just over $393 million.
At the moment, BNB is trading at a price of around $301, a slight decrease of about 2% from yesterday.
Process for burning tokens
As far as reported trading volumes are concerned, Binance is actually the biggest crypto exchange in the world. After the successful launch of its native token, BNB, Binance had become committed to burning 50% of its own circulating supply, which was 100 million BNB. As such, the exchange would burn 20% of the quarterly profits as per the details outlined in BNB’s original white paper. Since last year’s summer, however, things have changed, and this process has been altered.
The current white paper says that the overall amount of tokens that the exchange will burn every quarter shall be ascertained via the trading volumes which had been recorded in the quarter beforehand on the cryptocurrency-to-cryptocurrency platform. Therefore, every quarter will involve burning BNB based mainly on this trading volume, and this shall continue until half of the total BNB tokens are destroyed.
Another day, another token burn
In the previous quarter, the exchange had destroyed BNB tokens worth a whopping $595 million (which had also set a new record). Sam Bankman-Fried, the CEO of FTX, hence expects Binance’s profits for the last quarter to reach as high as $750 million.
Furthermore, the Q2 burn percentage remains currently unclear as Binance tends not to disclose specific numbers or percentages. Regardless, Binance was quite open regarding all of this, and the exchange had stated via a blog post in January that the so-called ‘accelerated burn’ had been required so that the process can be drastically sped up. If the exchange did not do this, then it could potentially take 27 years in order for Binance to successfully burn 50% of BNB’s aforementioned supply and achieve its goal.
Additionally, thanks to Binance permanently eliminating the BNB from circulation, the exchange will end up making the remaining BNB even scarcer. Also, while this token burn could be seen as a bullish indicator for BNB, it did not have too much of an effect on the price.