- The crypto exchange Binance conducted its quarterly Binance Coin Burn, destroying approximately 2.2 million BNB in the process.
- This makes the 10th BNB Coin Burn the second largest Coin Burn in USD and the third largest in terms of BNB.
As Binance announced today, the exchange has successfully completed its 10th BNB Coin Burn. This time, Binance burned a total of 2,216,888 Binance Coins (BNB) and further reduced the total amount of BNB. Measured in US dollars, Binance thus permanently destroyed USD 38.8 million, the second highest amount in the history of Binance. In BNB it was the third highest amount after April and July 2018.
As of today, Binance has thus burned a total of 16,742,041 BNB, which represents 8.37% of the total supply (now at 183,257,937).
Is the Binance Coin Burn already priced in?
The Binance Coin Burn is held quarterly and is a mechanism to programmatically reduce the number of BNB tokens based on the total profit (20%) in the quarter. In its whitepaper, Binance already committed to destroy exactly half of the 200 million available BNB tokens, exactly half, 100 million BNB.
The Binance Coin was issued in 2017 as part of an Initial Coin Offering to finance the exchange launch. In return for investor support, Binance is burning BNB on a quarterly basis to increase the value of the BNB token. At least in theory, the BNB price is expected to rise due to the shortage of supply.
However, such an effect has hardly been visible in the history of Binance Coin, at least apparently. Perhaps for this reason, Binance CEO Changpeng Zhao recently stated in a tweet that he does not believe that the majority of investors understand the background of the BNB coin burn. In response to a supporter’s question about whether the coin burns are priced in, Zhao wrote that he does not believe that most people even know that the exchange regularly burns BNB.
No, sadly, most people don’t know what a burn is.
— CZ Binance (@cz_binance) January 17, 2020
Although not explicitly stated, Zhao is likely to expect a price squeeze from the quarterly action. Assuming that there are no serious external influences, the decline in total circulating supply is expected to increase BNB’s value. However, this could be exactly the problem. The tokens currently allocated for burning do not come from the circulating supply (which has remained constant at around 155 millionBNB), but from the exchange’s reserves.
According to Binance’s whitepaper, 40% of the total NBB supply (80 million) has been awarded to the team as a reward for the work put into building the ecosystem. These are currently being used for the coin burn.
Regardless of this, Binance is doing a lot to increase the demand for BNB. In addition to numerous new fiat gateways, new futures contracts and Launchpad, Binance has recently announced that it is in talks with the licensed Japanese crypto exchange TaoTao and Z Corporation, which was founded by Yahoo Japan in 2018. The prospective partnership will enable Binance to offer trading services to users in Japan.
Regardless of the efforts made, however, Binance Coin Burn could only affect the price of BNB when the circulating volume is reduced.
At the time of writing, BNB is trading at USD 17.80 and has seen a slight drop of 1.05% in the last 24 hours.