All You Need To Know About Binance Coin’s Upcoming Burn
The next installment of Binance’s burn is scheduled on July 18th. The Binance Coin burn is the exchange’s way of making the cryptocurrency more valuable.
The team at Binance does a BNB coin burn every quarter as part of the design of the exchange as illustrated in their whitepaper. Each quarter, the exchange uses 20% of its profits to buy back and burn BNB up until a total of 100 Million BNB are burnt. However, the exchange does not notify the users of a pending coin burn. It announces the coin burn after the fact to avoid some form of market manipulation in the crypto markets.
The first BNB coin burn took place on 18th October 2017. In the initial burn, 986,000 BNB tokens were burnt. This did not have much effect on the price of the token, which was trading at around $1.31 on the day of the burn. The second burn took place on 18th of January 2018, after being announced on 15th of January. The event burned 1.8 million BNB tokens.
Holders of Binance Coin are entitled to a 50% reduction in fees on Binance which provides an incentive for users to buy and hold it. At the moment, Binance Coin is built on the Ethereum platform as an ERC20 token. Soon, Binance Coin will run on it’s own, custom built blockchain known as Binance Chain.
Burning Coins every quarter means that every 3 months the supply of Binance Coin will reduce as a result of the burn until 50,000,000 (half of the total 100,000,000 created) have been bought back.
The chart below shows how the crypto market have responded to Binance’s previous burn.
The past Binance Coins burns did not seem to have had much of an immediate impact on the market. Following the second BNB burn, the price spiked over the next couple of days, before falling over 60% until it consolidated around the $10 mark. It is to be noted that the prices depend on crypto market as a whole too.
The next Binance Coin burn will be interesting. As Binance has become even more popular and the profits will have increased by even more, it is anticipated that an increasing amount of coins will be burned. The more BNB that is burned, the greater the effect will be on the market price.