Many projects have introduced the inflation mechanism in their marked socioeconomics. To a certain extent, this is generally accomplished by so-called dynamic password burning. Binance can be said to be the most famous participant in the field of clearing its original ecological digital currency (binance coin – BNB). His work has changed in the five years of existence.

Up to now, the trading center has already burned up the BNB with a market value of billions of dollars, pursuing the goal of reducing the total supply of tokens by 50%. In this article, we have analyzed how this process works, how many burns have occurred so far, and when the next burn will occur.

What is coin burning?

The "burning" of money is essentially a process of removing it from the circulation of goods and sending it to the designated detailed address that only accepts digital money. This detailed address is called "burner" or "customer"

In traditional finance, what is close to burning money is that a company re purchases its own stocks from the market, trying to reduce the circulation and supply of commodities and improve the value of the stock market from the source. However, the most important difference is that the individual shares bought back still exist and belong to the enterprise, while most of the burned money is cleared up because no one can get them again.

Some well-known new projects introducing combustion mechanism include Shiba Inu (implemented in April this year), Ethereum (originated fromEip-1559 of 2021) and several optimization algorithms.

BNB's role and startup mode

BNB is the original ecological digital currency of the world's largest data encryption trading center. It is an important token applied in the whole ecosystem of binance, including BNB beacon chain (formerly known as binance chain) and BNB intelligent chain (formerly known as binance intelligent chain).

BNB was announced together with the trading center in 2017. Before binance finally converted it into BNB chain two years later, it was used as erc-20 token on the Ethereum network.

The industry report explained that at the beginning, there was a "strict limit of 200 million BNB" - this number "will eventually rise". However, the company described the premise of combustion mechanism in the industry report, saying:

"Every quarter, we will apply 20% of the profits to repurchase bnbs and destroy them until we repurchase 50% of all bnbs (1 million). All repurchase transactions will be released on blockchain technology. We will eventually destroy 1 million bnbs and the remaining 10 billion bnbs."

BNB quarter full automatic combustion

After binance was launched, the elite team introduced the original quarterly combustion mechanism based on the BNB trading volume and the expenses incurred by binance. However, the company fabricated a lie that it lacked sufficient clarity and predictability, so it changed it into a quarterly fully automatic incineration process.

The new method adopted in December 2021 allows automatic calculation on the chain. According to the quarterly price and the total number of blockchains generated on the BNB chain, it is clear how many tokens must be burned. In essence, if the price of BNB decreases, the total number of tokens burned will increase to keep within the resolution of the supply and demand images.

Binance's service commitment is that quarterly automatic burning is "both objective and verifiable, independent of the revenue generated on binance CEX through the use of BNB."

Bep-95 and burning BNB according to BNB chain

Although the initial idea was to set 100 million tokens as the target of burning, and limit the total supply of BNB to the same number of coins, this idea has not changed, but binance must implement several types of changes in the adjustment process. More specifically, the company outlines new technologies to accelerate the combustion rate of BNB (in addition to the fully automatic combustion described above).

The Twin Star evolution proposal (BEP) 95 implemented in November 2021 enhanced the immediate combustion mechanism for the BNB chain. It allows the blockchain automatic combustion verifier to collect a part of the natural gas fee from each blockchain (once every 3 seconds).

This means that the more people apply the BNB chain, the greater the BNB burned. A twitter account that tracks the number of burned bnbs indicates that by the end of July 2022, more than 106000 bnbs have been removed from the amount released according to this mechanism, with an average rate of 285 bnbs per day.

However, it is worth noting that the bep-95 combustion mechanism will continue even after the price of 100 million tokens is reached, because it depends on the BNB chain Internet.

How many bnbs have been damaged so far?

Gradually from 200 million BNB in 2017, binance's ultimate goal is to reduce the supply of the circulation system by 50%, as described above. In addition to the daily incineration treatment mechanism, the mechanism has stopped the circulation of 106000 coins, and the company has also realized 20 scheduled quarterly full-automatic incineration treatments.

The most recent one was in early July. According to the phenomenon of binance ecosystem in the second quarter of 2022, 1959529 million barrels were burned. According to the price on July 13, this amount is equivalent to 444 million US dollars.

At the time of writing these words, the total combustion volume of BNB was slightly lower by 39 million (equivalent to US $9.3 billion of today's price), which means that the remaining commodity circulation supply is still US $161 million to the north. The next combustion will be carried out after the completion of the third quarter. Up to now, more than 2 million yuan of BNB may be removed.