On April 11th, CZ, the CEO and Founder of Binance announced;
And on 19th April, Binance carried out the 19th burn of BNB, the native token of its ecosystem. According to reports, 1,839,786.26 BNB, which is approximately $741,840,738.874 USD, was burned. The last time this occurred was on 18th January 2022. About 1.6 million BNB was destroyed.
Burning in Crypto and the Effects
Burning in crypto means to permanently remove a specific number of tokens from circulation. Organizations or individuals do this by transferring the tokens to a wallet address that cannot be accessed anymore after the transfer. So the token is referred to as being burned or destroyed since it cannot be used because it cannot be accessed.
The reason why projects burn their tokens is to diminish the circulating supply of their tokens with the hope that it will have “deflationary” effects in the market. Burning does not completely mean that the value of a token will be increased. Although the idea is that scarcity initiates higher value for assets, especially monetary assets.
Binance and the BNB Burns
In 2017, when Binance was launched, the organization planned to remove 100 million BNB or half of its total supply from circulation by burning the tokens. However, in 2021, it initiated a new formula for burning its token.
This formula was introduced after community feedback was received because of the centralized factors that controlled the precious burn system. BNB Auto-Burn system is the current process used for burning BNB. In 2017, 2018, 2019, 2020, and 2021, Binance burned 986,000, 8214653, 5324482, 11322152, and 7352392 tokens respectively.
The next BNB Burn which will be the 20th burn will take place around July 2022 except there is any change. BNB burning will continue until the circulating supply is below 100,000,000 BNB.
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Binance Launchpad
Binance launchpad can be said to be one of the most successful launchpads in the crypto industry. It popularized Initial Exchange Offering (IEO). The launchpad has helped several projects raise millions of dollars with market valuation at billions of dollars.
The BNB cryptocurrency is an integral part of the launchpad operation. Before anyone is allowed to participate in the launchpad, he is expected to hold the BNB token. The successes recorded in the past gives investors confidence that the project conducting token sale may also do well, thus there is always a rush. This rush pushes the price of BNB northward.
Binance the world’s largest cryptocurrency Exchange
Aside from the launchpad, one of the earliest use cases of BNB was for payment of fees on the Binance exchange. As the exchange grows, the amount of BNB needed will also increase, thus pushing the price higher in the absence of not many BNB tokens as a result of continuous burning.
BNB Chain
As an EVM compatible blockchain, it is easy to port projects built on Ethereum to the BNB Chain. The fees in Ethereum was a factor that drove the adoption of BNB Chain. Currently, there are thousands of tokens created on the BNB Chain network.
In the crypto market, there’s always a market downturn, but long term look at some of the cryptocurrencies with strong potentials, the uptrend is undeniable. BNB is on an upward trajectory.
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