Binance to Burn $2.4 bln Worth of BNB, Reduce Token Supply
Top cryptocurrency exchange, Binance, has initiated the process of giving up the 40% allocation of the total supply of its native token Binance Coin (BNB). The earmarked 80 mln BNB (currently worth about US$2.4 bln) was originally meant to reward the Binance team for their effort at building its ecosystem.
The decision to burn the BNB allocation comes as the exchange completed its eighth quarterly BNB token burn as stipulated in its whitepaper. The burning of 808,888 BNB (worth roughly $23.8 mln) on Friday July 12 is part of effort to contribute it towards the exchange’s commitment to burning a total of 100 million BNB.
The exchange says:
“The eventual total supply of BNB will still be 100,000,000 BNB. The current total supply of BNB is 189,000,000 BNB, which means that 89,000,000 BNB still need to be burned. The team will burn off the 80,000,000 BNB team allocation first, and the remaining 9,000,000 BNB will be burned by Binance.com exchange.”
Following the news, BNB reached the sixth position in the Coinmarketcap ranking with a $4.4 bln cap and a token price of $31. However, despite the news is somewhat huge, the market reaction to the price didn’t reflect much – or at least for the moment. It is also not clear if BNB will stick at this spot this time or for longer as there are questions about its mechanics of value and EOS trails it behind with a slight difference in market capitalization.
A key factor that may work to make the exchange’s native asset stands a chance to rise even higher on the ladder before the year ends is its decentralized exchange platform. If it gets more active and running as projected, Binance will continue to earn its revenues in BNB despite the $15 mln worth of crypto it raised during their ICO in 2017 is now worth $4.2 bln. This is in consideration that the Binance team is giving up a $2.4 bln equivalent of the total value by burning hence its supply would be reduced.
Also, there are suggestions that atomic swaps between Binance Chain and Bitcoin blockchains may soon be possible using the Hash Timer Locked Contract functions. The HTLC will support Atomic Peg Swap proposed as the standard way for asset/token issuers to peg or migrate part of the asset/token onto Binance Chain. This will be a sure boost for the platform if it gets to be a reality. The tool will allow traders to use Binance DEX for their trading activities and withdraw BNB or any Bitcoin proxy token in real Bitcoin.