Binance wants to implement a new burn mechanism for its BNB token. The objective would be to burn 10% of the transaction fees related to the Binance Smart Chain (BSC). At the same time, Binance will keep the disinflationary mechanism already in place linked to the quarterly trading volume of the platform.
A burn that would affect Binance Smart Chain fees
On its website, Binance unveiled its new “burn” project regarding the Binance Smart Chain (BSC) transaction fees.
The project aims to burn a part of the transaction fees of each block and that the proportion is adjustable by the governance of the network.
The objective would be to reduce the supply of outstanding NBB tokens over time.
To be more precise, this proposal, named BEP-95, suggests that the share of the burned fees be set at 10%. In practice, the network collects about 6,814 BNB in daily transaction fees.
Thus, based on the figures obtained at the time of writing, the introduction of this update would reduce the offer by 681 BNB per day. This represents an amount of $334,000 at the current price.
In order for the project to be voted on, each validator must raise a minimum of 2,000 BNB. The proposal will simply be to know if the validators are “for” or “against” the implementation of this additional burn mechanism. The tokens will of course be returned after participating in the vote.
It is interesting to note that this update will not impinge on the disinflationary mechanism already in place within the Binance exchange.
Indeed, the latter is currently burning tokens on a part of the trading fees related to the use of the platform. This operation takes place every quarter and depends on the volume of trading that has taken place over that same period.
For example, in April 2021, Binance performed its 15th quarterly BNB burn leading to the destruction of 1,099,888 BNB, equivalent to $595.3 million at the time of the transaction.
This resulted in the total supply of BNB decreasing from 170,532,825 BNB to 169,432,937 BNB.