BNB's destruction mechanism is an important part of its technical features, which helps reduce the total supply of BNB in circulation, thereby potentially increasing its scarcity and value. BNB uses two main destruction mechanisms:
Real-time Burning Mechanism (BEP-95): This is part of the Binance Evolution Proposal (BEP)-95, which aims to reduce the total supply of BNB by utilizing part of the gas fees on the BNB Smart Chain (BSC). Since its implementation in 2021, this mechanism has promoted the destruction of BNB every day1.
* Binance China Registration Page:
https://www.suitechsui.io/join?ref=OFU67AVX
* Binance International Registration Page:
https://www.binance.com/join?ref=OFU67AVX
Quarterly Automatic Destruction: This is a planned quarterly destruction performed by Binance, that is, a predetermined number of BNB is repurchased from the market and then destroyed. This destruction is strategically planned based on Binance's financial performance and is transparently pre-announced. Factors that determine the exact amount of BNB to be burned include Binance’s profitability, BNB’s circulating supply, and the level of blockchain activity as measured by block production during the quarter1.
The introduction of the BNB auto-burn mechanism marks a major evolution in Binance Coin’s supply management strategy, aligning with the transition of Binance Chain and Binance Smart Chain to a unified BNB chain. This strategic move aims to increase the intrinsic value of the BNB token while laying the foundation for long-term sustainable, secure growth of the BNB ecosystem. The auto-burn mechanism automatically calculates the amount of BNB to be burned each quarter based on the then-current BNB market price and the number of blocks produced on the BNB chain during that period. This approach introduces a new level of transparency and predictability compared to the variability of previous volume-based burns1.
Binance claims that this improved burn strategy not only improves the transparency of the BNB token economy, but also helps stabilize the BNB market price by mitigating potential price volatility. The purpose of the BNB auto-burn is to systematically reduce the total supply of BNB in circulation, thereby potentially increasing its scarcity and value over time. This approach reflects Binance’s commitment to building a strong and thriving ecosystem for BNB, ensuring it remains a key pillar in the broader cryptocurrency space1.
