The volume of BNB burnt is regularly modified depending on the cost of BNB as well as the number of blocks created on BSC throughout the quarter.
What is a coin burn?
The coin burn occurs whenever a cryptocurrency project burns part of its coins, typically to limit the circulation quantity and boost the worth of the rest of the coins. The funds are delivered to a defunct crypto wallet including an unidentified secret key, which ensures they will never be used again.
Coin burns are typically done on a quarterly or semi-annual basis. Binance has pledged to destroy 100 million BNB currencies per quarter. This leaves a total output of 100 million BNB, the most amount of BNB available.
What is BNB auto-burn?
BNB auto-burn was developed in conjunction with the introduction and renaming of Binance Chain as well as Binance Smart Chain as BNB Chain. As per Binance, the auto-burn process was created to optimize the worth of the BNB token while also establishing a stable and secure long-term growth strategy for the BNB network.
Binance used to execute quarterly BNB burning depending on their BNB trading activity. However, in December 2021, quarterly burning was superseded with BNB auto-burn.
The auto-burns are performed quarterly; however, they are no more entirely dependent on Binance trade volume.
The BNB auto-burn system is programmed to modify the amount of BNB that must be burnt 2 criteria:
- BNB pricing
- Quantity of BSC blocks created every quarter
Binance claims that the new BNB burning methods are more transparent and reliable than the old quarterly burn approach. The new auto-burn system, said by the Binance team, would help sustain the BNB value and prevent it from excessive volatility.
BNB auto-burn, from a technology perspective, leverages on-chain data out from BNB Smart Chain to compute how much BNB must be burnt. This is the way the system “adapts” the volume of fuel burned.
The quantity burned is also driven by demand and supply factors, which implies that as the value of BNB falls, so does the burn rate. Therefore, Coin burning boosts the value of a cryptocurrency.