Burning involves destroying BNB tokens, taking their availability entirely. Burning is exactly the opposite of issuing, which refers to the creation of new currencies. The burning happens periodically to increase the demand for the currency, theoretically increasing its price.
For such burns, Binance uses its profits to buy BNB on the market and then burns them. His goal with this is to reduce the offer to 100 million BNB tokens. Currently there are 144,406,561 BNB in circulation.
Price impact and previous burns
BNB’s price rose by about 20 cents after the burn. Its current value is $ 30.42, according to CoinMarketCap – a cryptocurrency metrics website owned by Binance itself.
Binance burns BNB every quarter. In the last period, 1.74% of the token offer was burned, or 3,477,388 units, currently valued at $ 60.5 million. In the previous quarter, 3.4 million tokens were withdrawn from circulation, which corresponded to 1.69% of the token’s offer ($ 52.4 million).
Binance Coin has been having a good year. Its price plummeted in March, just like many other currencies, amid market uncertainty caused by the new coronavirus pandemic. At the time, its value went from $ 25 to $ 8. However, BNB performed well in this latest fever boom DeFi, where investors placed billions of dollars in exchanges, loan protocols and synthetic assets.
$ 68,000,000 USD worth of #BNB taken out of circulation forever.
If you don’t understand: burn, buyback, airdrop, QE, and stimulus, then you are at a significant disadvantage to reach financial freedom. Better learn it.https://t.co/3sNQRpycA3
– CZ Binance (@cz_binance) October 17, 2020
Several projects have also taken the course towards Binance Smart Chain, the company’s blockchain. Most were imitations of more popular projects on Ethereum, the blockchain on which most of the recent activity took place.
“From providing liquidity for projects like Burger or PancakeSwap, to paying minuscule gas fees on the Binance Smart Chain, everything helped to expand the utility value of BNB,” said Binance CEO Changpeng Zhao in a blog post about burning . The price of the token has risen over the past few months, until it reached its current level above $ 30.