Binance has officially completed another quarterly BNB token burn, eliminating millions of tokens in just one day. While this event is positive news for the Binance Coin (BNB) community, the price of BNB has yet to show any bullish response to the significant reduction in supply.
Binance Burns Almost $1 Billion Worth Of BNB Tokens
On July 22, the BNB Foundation announced the successful conclusion of its 28th quarterly token burn initiated directly on the BNB Smart Chain (BSC). The amount of tokens burnt in this quarter was approximately 1,643,699 BNB, valued at $971 million.
The burnt tokens represent about 0.81% of BNB’s total supply, effectively destroying over 1.64 million from its total supply of 145,937,964 BNB. The BNB token is the native coin of the BNB Chain ecosystem and is essential for powering the entire blockchain.
BNB employs a unique token burn strategy that allows it to gradually reduce its total supply and potentially increase its scarcity. The goal of the token burn is to grossly decrease BNB’s total circulating supply to 100,000,000 BNB. This means that based on its current supply at the time of writing, BNB still needs to eliminate over 45.9 million tokens to reach its target.
Additionally, the BNB token has utilized an auto-burn mechanism to systematically burn tokens since early 2022. The BNB auto burn provides an independently auditable, objective process for burning tokens.
The number of tokens burnt is reported quarterly by the auto-burn system, which functions independently of Binance’s centralized exchange. Furthermore, BNB also implements a real-time burning mechanism based on gas fees. Validators typically collect the rate of gas fees in each block and burn them at a fixed rate.
Interestingly, BNB’s token burn this year is significantly different from previous quarterly burns. This quarter’s burn occurred directly on BSC due to the ongoing BNB Chain fusion. Binance has revealed that future token burns will also follow a similar pattern, occurring on the Binance Smart Chain.
Market Price Continues Downward Trend
The primary goal of a token burn is to reduce a cryptocurrency’s total circulating supply, which can potentially lead to a surge in its value. Despite BNB’s substantial token burn, worth almost $1 billion, the price of the cryptocurrency has not shown any significant bullish reaction.
BNB is currently trading at a price of $580.19, ranking as the fourth largest cryptocurrency according to market capitalization. However, the token’s market price is on a slight downward trend, experiencing more than a 2% decline following its recently completed 28th quarterly token burn.
Compared to the 27th quarterly burn on April 24, the number of BNB tokens burnt for the 28th quarter was significantly lower and the value of BNB had decreased. The 27th quarterly burn had destroyed approximately 1,944,452.51 BNB tokens, valued at $1.17 billion at the time. Following this substantial burn, the price of BNB, which was about $600 then had steadily risen in value, reaching a new all time high of $717 in June.
Featured image created with Dall.E, chart from Tradingview.com
