Cryptocurrency News

Binance Coin (BNB) Burning Mechanism is Live on Binance Smart Chain (BSC)

By December 3, 2021 No Comments

Ethereum (ETH) is no longer the only major coin with built-in gas fee burning mechanics. The latest update to Binance Smart Chain (BSC), the so-called Bruno hard fork, introduced a real-time Binance Coin (BNB) burning mechanism, similar to Ethereum’s own fee burning mechanics launched as a part of the London hard fork in August.

Key takeaways:

  • The activation of the BNB burning feature was announced on BSC’s Twitter channel on Wednesday. The company explained, “Each block will burn a fixed ratio of the gas fee collected by the validators in each block,” and added that the burning ratio is currently set at 10% but could be adjusted later on via a governance vote.
  • The burning model was lanced via Binance Evolution Protocol BEP-95 and first executed at block number 13,082,000.
  • The implementation of BEP-95 will reduce the supply of BNB and act as a deflationary tool that will likely push the value of BNB higher, in the same way that ETH burning drove the value of the world’s second-largest crypto to its historic highs.
  • In the last week of November, ETH reached a significant milestone of 1 million tokens, worth more than $400 billion at current market rates, having already been destroyed thanks to the EIP-1599 burning mechanics
  • BNB burning differs from ETH in the way network fees are processed. While all of ETH’s gas fees are sent to the burn pool, some of BSC’s fees are still distributed to the network’s validators.
  • The real-time burning mechanism is not the only approach to decreasing BNB supply. Binance also performs scheduled BNB quarterly burns, with the intention of removing all of the exchanges’ BNB from circulation and reducing BNB’s total supply to 100 million coins.
  • The last quarterly burn was completed days before BEP-95 was first announced. The 17th quarterly burn forever removed 1,335,888 BNB (equivalent to $639,462,868 at corresponding market rates) from circulation.
  • The price of BNB reached $648 on the day Bruno update rolled out and came within 6% of its all-time price peak from May.
  • For more information about the latest BSC upgrade, you can check our Binance Coin section from our latest Coins to Watch article.