Binance Completes Quarterly Burn of $400 Million Dollars in BNB
Binance has recently completed its 16th quarterly burn, locking away almost $400 million worth of BNB tokens which is its second highest burn in history.
Burning Stakes to Raise Stakes
Binance published a statement on its official blog on the 17th of July revealing that it had just burned almost half of a billion dollars worth of coins. The timely burn was expected. What was not exactly predictable was the amount of tokens Binance was set to lock away.
“We have completed our 16th quarterly BNB token burn of 1,296,728 BNB (roughly $393,673,653.52 equivalent),” Binance official website reads. “The latest quarterly burn includes the actual burning of 1,291,565 BNB, plus an additional 5,163 BNB that was effectively burned via the Pioneer Burn Program.”
It is the sixteenth time Binance would be removing a portion of available Binance Coin (BNB) tokens from circulation. According to its whitepaper, the exchange aims to burn 20 percent of the total BNB tokens in circulation every new quarter, until half of BNB’s total supply is burnt.
On the surface, Binance quarterly burns might look alarming, especially considering the amount of money involved. The latest ~$400 million worth of BNB tokens, for example, is Binance’s second largest burn in history, only after the $600 million worth of BNB tokens the exchange locked away two quarters ago. However, the numbers involved are not negative news by any means. If anything, the decision to burn coins is deflationary rather than inflationary, and is expected to drive up the price of the token.
By locking away coins to an “eater” address inaccessible to anyone, investors and traders might be incentivized to buy more coins in preparation for an increase in market cap.
Since October 18th, 2017, which was Binance First Burn, Binance Coin’s price has risen by more than 64,000 percent to record an ATH of $690 per coin in May, 2021.
Interestingly, this time BNB’s price hasn’t reacted, but has instead dwindled in value by 5.3% over the last 24 hours.
Positives From Binance’s Latest Burn
Are there positives to be taken from Binance’s latest exercise? Historically, yes. First is the fact that a burn of almost $400 million means huge revenues for Binance in the last quarter.
While its initial whitepaper planned to lock away 20% of its total supply every quarter, the leading exchange tweaked its rule last summer. The current version of the white paper states that the number of tokens that Binance destroys every quarter is determined by the trading volumes on its crypto-to-crypto platform that were recorded during the previous quarter. A burn of this magnitude, therefore, signifies Binance’s revenues for the last quarter could very well have been past the $2 billion dollar mark.
Binance’s history of favorable reaction to burns also makes the fresh burn a positive one, and a cause for optimism in an otherwise dour crypto market. BNB currently trades at $284.
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