Binance’s quarterly coin burn is coming up soon on July 18th, according to the schedule set by Binance. The coin burn is part of the schedule mentioned in the BNB whitepaper.
Burning a coin is the process of sending the token to an address that is invalid and does not have a private key. This effectively removes tokens from circulation, thus reducing the supply of the asset by reducing supply, demand, and price increase.
The BNB token is an ERC20 token released to users of Binance. Holding BNB tokens results in a 50% reduction in trading fees on the platform.
As stated in the whitepaper:
“Every quarter, we will use 20% of our profits to buy back BNB and destroy them, until we buy 50% of all the BNB (100MM) back. All buy-back transactions will be announced on the blockchain. We eventually will destroy 100MM BNB, leaving 100MM BNB remaining.”
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.
As can be seen from the price graph, the price steadily moved downwards until the coin burn took place. From a high of $23 on 15th, the coin saw a slow decline until 18th, where it increased in price from $10.06 to $15.54 in the span of one day. This represents a whopping 54% increase in price.
The most recent burn saw the destruction of 2.2 million BNB tokens. This took place on April 18th. Interestingly, the coin did not see any drastic changes in price.
The next coin burn is coming on 18th of this month. It is left to see how the price will be affected by the event.
The post Binance Coin [BNB]: All you need to know about the upcoming coin burn appeared first on AMBCrypto.