Binance cryptocurrency exchange has carried out the fifteenth quarterly Binance Coin (BNB) token burn. 1,099,888 BNB withdrawn from circulation ($ 595 million at the time of the operation). The company announced this on its official twitter account. On the eve of the 15th Binance token burn, their value reached an all-time high of $ 638.
Since the end of March, the price of BNB has risen 180 percent from $ 233 to a maximum of $ 638. This rally has narrowed the gap between BNB and ETH, Binance Coin’s capitalization now is more than a third of Ethereum’s market capitalization.
Quarterly, Binance for 20% of its income buys and burns BNB coins from circulation to ensure the scarcity and liquidity of the token. This will continue until 50% of the total supply will be exhausted. Ultimately, only 100 million BNB will remain.
“Burning” refers to the process of permanently disposing of a token from circulation. All coin burning operations are recorded on the blockchain as a transaction, so anyone can verify that the coins have indeed been permanently withdrawn from circulation.
When Binance launched BNB in 2017, it pledged to burn a total of 100 million coins, which is half of the total supply. It is logical that a decrease in supply leads to an increase in the price of an asset.
At the moment, Binance has destroyed 15.3% of the total BNB emission (this is about 200 million BNB). About 35% of the tokens are yet to be burned in the coming quarters.
The Block analyst Larry Cermak noted that the latest BNB burn is different from the previous ones. On his twitter he wrote: “Binance’s Q1 burn stands out a bit over the previous ones”.
The 15th token burn became the largest in the history of the CZ exchange in fiat equivalent. In many ways, of course, this was facilitated by the rise in the Binance Coin rate. Last time, more than 3.6 million BNB (worth $ 165.8 million) were burned. But in the first quarter of 2021 the price of the token increased 16 times. So, today’s event can be called unprecedented.
Binance Coin growth
BNB’s strong uptrend has been driven by the high popularity of the Binance exchange, as well as the rapid development of the Binance Smart Chain ecosystem. It’s a smart contract-enabled chain that powers various decentralized finance projects.
Binance Smart Chain has seen a significant increase in daily transaction volume in recent months. According to the BSCScan blockchain observer, the daily number of transactions on the BSC network has grown from 380 thousand at the end of January to more than 4.7 million as of today. This means that users are gradually switching to using this network due to its available transactions.
Many analysts believe that the BSC ecosystem can compete with Ethereum for the right to be considered the main platform of the sphere of DeFi. However, there are also many critics of BSC. It is reproached for excessive centralization, which contradicts the basic principles of the crypto market.
One way or another, the burning of coins almost always had a positive effect on the BNB rate. Will the growth be repeated this time?