Binance, a bigwig in cryptocurrency exchange, completed its eighth quarterly removal of their team’s token called the Binance coin (BNB) last Friday, July 12. Binance is the global leader in the industry based on trading volume.
As per Binance’s whitepaper, the “burn” (insider term denoting the deduction of tokens) happened according to plan and involved the Binance team’s token allocation amounting to 808,888 BNB.
The burned BNB tokens are valued at $23.8 million according to Binance, although crypto news agencies later upscaled the amount to $26.4 million, more than 2 million the original reported value.
As of press time, BNB is now priced at $25.89 as per CoinMarketCap’s website. This is a significant drop following the 5.95% increase a day after the burning occasion was announced.
Binance has put up the event’s transaction information on its website as part of the exchange’s commitment to transparency for its users.
Why Binance Burned Their Native Tokens
Burning tokens is not an uncommon happening for exchange companies. Its direct result is the permanent and irreversible removal of coins from the circulation. This, in turn, reduces the total market supply of the company.
There can be a number of reasons, but one thing is true: coin holders benefit from it. A burn creates economic scarcity which stabilizes the value of the token and serves as an incentive for investors. This ups the demand and results in each token’s price appreciation.
The burn event that took place this month is the 8th BNB coin burning. All in all, 12,463,247 BNB tokens, or 6.23% of the total token supply had been burned. This puts Binance’s total supply at 187,536,713 BNB today.
Binance stated that the burn was made to contribute the team’s allocated BNB to the company’s goal of burning a total of 100 million of BNB tokens. This allocation was originally made as a reward for the team’s efforts in putting up the Binance ecosystem.
The team’s tokens that amount to more than 80 million BNB made up 40% of the exchange’s total supply. Binance further indicated that they will be burning the team’s provision to meet the 100 million eventual total BNB supply they are eyeing.
Another 9 million BNB is expected to be burned through exchanges in their website Binance.com.
Asked if the Binance team benefits from the burn event, CEO Changpeng Zhao or “CZ” as he is fondly called, has replied that the members get paid little by little in BNB tokens. This is possible through successful transactions that drive revenue for the profitable organization.
CEO CZ founded Binance in 2017 in China, but he was forced to relocate its headquarters along with the servers into Japan following a government ban on crypto trading in China in September of 2017. In a span of a few months, in March 2018, Binance was able to establish more offices located in Taiwan.
In 2018, Binance became the number one cryptocurrency exchange for BTC based on trading volume. Their popularity can be attributed to low altcoin exchange fees. Users also state that the company has more generous perks as compared to other competitors.
Binance has a really positive reputation in the industry. They have grown their user base and perform better liquidity (the ease of buying or selling tokens due to better market movement); they also have a referral program with shilling incentives to its users.
As of writing, Binance has a circulating supply of 109,175,490 BNB. They are still at the peak of the current crypto exchange platform, with a trading volume of $451,588,150 or 47,160 BTC.
Binance remains to be the world’s top-performing cryptocurrency exchange and wallet and is set to achieve the 100 million supply mark that puts BNB at a favorable value to its investors.