Binance scraps the quarterly burn mechanism, replaces it with Auto-Burn protocol
The change comes on the back of requests from the Binance Smart Chain and the larger BNB token community
Yesterday, Binance announced the implementation of a new protocol that will automatically burn BNB tokens to give a better overview of the Binance Smart Chain (BSC) activity. As per a blog post published by the crypto exchange today, the new Auto-Burn protocol will improve transparency and enhance predictability for the community.
Binance hopes to foster a healthy blockchain co-existence between Binance Smart Chain (BSC) and the Binance Coin (BNB) ecosystems by implementing this new mechanism.
“Our announcement of the BNB Auto-Burn is a natural next step in BNB’s journey and will help the BNB community grow through providing greater autonomy, transparency, and predictability,” a spokesperson told Coindesk.
Burning is a common mechanism through which altcoin creators control the supply of tokens in circulation. In Binance’s case, the process removes from circulation BNB tokens by sending them into an inaccessible wallet. The burning process will be both verifiable and objective following the deployment of the new system. It will also be independent of the revenues generated from the Binance centralised exchange through the transactions using the BNB token.
The number of tokens burned will now hinge on other factors, including the value of the BNB/USD pair. The burn will take into consideration both the supply and demand of the tokens as well as the quantity of blocks produced over a quarterly period. There will also be a price anchor – a fixed value initially maintained at 1000. This value can only be adjusted via a BSC BEP proposal and community vote as per the blog post.
Binance noted that the burns would stop at the point where the supply falls below 100 million BNB. The exchange further detailed that the Auto-Burn mechanism signified that both BNB and the BSC were gearing up towards the next phase of innovation. The Chao Zeng-led company added that with the community’s input, BNB would evolve to help further build the blockchain ecosystem.