Activating the BNB Burning Mechanism in the Binance Blockchain…Details Here


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Binance recently activated the “BEP-95” upgrade, which will integrate a real-time burning mechanism into its new chassis.

From now on, a fixed percentage of the gas fees collected by Binance BSC blockchain validators will be burned in each block.

Real-time burning mechanism start:

announced Binance announced the launch of the new mechanism via Twitter earlier this week.

The burn rate, adjustable by judgment, is said to be up to 10% at present.

The BEP-95 upgrade was introduced on October 22, with the goal of speeding up the burning process of Binance and further decentralizing the network.

The company also assumed that this would lead to an increase in the price of the digital currency BNB, and presumably that this would increase the scarcity of the coin.

In a statement, Binance said:

While implementing this BEP may reduce the total amount of BNB that validators and commissioners receive, the paper fee-denominated value of their rewards may increase.

This burning mechanism will reduce the supply of BNB, so the increased demand will drive the value of BNB higher.

Binance has been conducting periodic burns on the Binance BSC blockchain manually since its inception.

Its goal was to reduce the total supply of BNB by 50%, from 200 million to 100 million coins.

One of these burns took place shortly before BEP-95 was announced, taking $640 million (1,335,888 BNB) off the network.

The burning will run in real time on Binance along with the scheduled burning events on the exchange. Notably, it will remain in effect even after the scheduled burns reach the 100 million BNB supply target.

As BEP-95 reads:

By design, BNB is a deflationary symbol.

Burning Binance Coin vs. Burning Ethereum:

Binance’s new burning mechanism is similar – but not identical – to Ethereum.

While both chains collect cryptocurrencies through transaction fees, some BSC Binance fees are still used to compensate and reward validators.

Whereas on Ethereum, all mandatory fees are sent to the burning pool, with a “gift” option available for dealers to compensate miners. The rest of the miners’ compensation is delivered through block rewards.

Additionally, since Binance uses a Proof of Stake mechanism, there are no new tokens entering circulation to offset the burn.

Meanwhile, the Ethereum block rewards and the burn complex work against each other when affecting the coin supply.

This sometimes results in a net deflationary period for Ethereum but still produces an overall inflationary environment.

Read also:

Facebook changes its policy and will allow more cryptocurrency ads

The founder of Twitter, after his resignation, renames the “Square” application to “Block” … Is it the beginning of his focus on crypto and blockchain?

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