As a seasoned crypto investor with several years of experience under my belt, I have witnessed many token burn events in the past. The recent Binance BNB token burn of approximately $971 million worth of tokens was a significant event that I closely followed. Having seen the impact of previous token burns on the price of other cryptocurrencies, I expected a bullish response from the market following this substantial reduction in supply.
As a crypto investor, I’m excited to share that Binance has successfully carried out another quarterly BNB token burn, eliminating a substantial number of tokens from circulation within a day. This development is undeniably positive news for the Binance Coin (BNB) community, as it signifies a reduction in the total supply. However, despite this significant event, I’ve noticed that the price action of BNB has yet to reflect any bullish response.
Binance Burns Almost $1 Billion Worth Of BNB Tokens
On July 22, the BNB Foundation declared the completion of its 28th token burn event held directly on the BNB Smart Chain (BSC). The quantity of tokens destroyed in this quarter was roughly equivalent to 1,643,699 BNB, representing a value of approximately $971 million.
Approximately 0.81% of the BNB chain’s total BNB supply has been destroyed through burnt tokens. This equates to over 1.64 million tokens, leaving a remaining supply of around 143,297,324 BNB. The BNB token serves a crucial role within the BNB Chain ecosystem as its native currency, facilitating transactions and powering the entire blockchain network.
Binance Coin (BNB) implements a distinctive token destruction mechanism, which progressively lowers its total availability and possibly amplifies scarcity. The objective behind the token destruction is to substantially decrease BNB’s circulating supply to approximately 100 million tokens. Given the current supply at the time of writing, Binance Coin must eliminate more than 45.9 million tokens to reach its goal.
An extra feature of the BNB token is its automatic token burning mechanism, initiated in early 2022. This self-regulating token burn process offers transparency and objectivity through independent audits.
As a researcher studying the Binance Smart Chain, I’ve discovered that the auto-burn system independently reports the quantity of tokens burnt every quarter. Additionally, Binance introduces a real-time burning mechanism that is linked to gas fees. Validators gather gas fees in each block and subsequently burn them at a predetermined rate.
As a crypto investor in BNB, I’ve noticed an intriguing shift in the token burn mechanism this quarter compared to past ones. This time around, the burn took place directly on the Binance Smart Chain (BSC) due to the ongoing BNB Chain fusion process. Binance has made it clear that future token burns will adhere to a similar pattern, occurring exclusively on the Binance Smart Chain.
Market Price Continues Downward Trend
The main objective of a token burn is to decrease the overall number of tokens in circulation for a specific cryptocurrency, which theoretically could cause its value to increase. However, despite BNB‘s substantial token burn, valued at nearly $1 billion, there has been no notable bullish price response observed so far.
The current value of BNB stands at $580.19, making it the fourth largest cryptocurrency based on market capitalization. Lately, its price has been decreasing by over 2%, possibly as a result of its most recent quarterly token burn that has just been completed.
In comparison to the 27th quarterly burn on April 24, which destroyed around 1,944,452.51 BNB tokens worth approximately $1.17 billion, the quantity of BNB tokens burnt for the 28th quarter was much lower and the value of BNB had decreased. Preceding this reduction in burn rate, the price of BNB, which was roughly $600 at that time, underwent a steady increase and reached a new record high of $717 in June.
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2024-07-23 16:42