Binance ‘burns’ nearly $400 million worth of BNB
Crypto exchange Binance has destroyed roughly 1.3 million BNB as part of its quarterly token burn.
Major cryptocurrency exchange Binance has announced that it successfully completed the 16th quarterly token burn yesterday, removing $393.6 million worth of Binance Coin (BNB) from circulation.
“We have completed our 16th quarterly BNB token burn of 1,296,728 BNB (roughly $393,673,653.52 equivalent). The latest quarterly burn includes the actual burning of 1,291,565 BNB, plus an additional 5,163 BNB that was effectively burned via the Pioneer Burn Program,” the exchange reported.
?? $393.6M USD has been burned! ??
— Binance (@binance) July 18, 2021
Binance’s quarterly burn is a deflationary mechanism that allows the exchange to repurchase and permanently destroy a certain amount of BNB held in its treasury. Currently, the value of burned coins is equal to 20% of Binance’s profit during the corresponding quarter.
Thus, while the exchange did not publicly disclose its revenues, the latest burn suggests that Binance is currently earning a profit of around $2 billion per quarter.
Notably, Binance’s “Pioneer Burn Program,” launched last September, allows the exchange to compensate users who erroneously sent their BNB to smart contracts from which the tokens cannot be recovered. As part of covering such losses, Binance now burns—effectively takes out of circulation—these lost tokens as well.
Overall, the latest burn is traditionally larger than the previous one, although not in dollar terms. On April 16, Binance burned 1,099,888 BNB—worth about $592 million at the time. Since then, however, the crypto market has plummeted by roughly 50% across the board, with most major cryptos still trading at half the price they were worth in April and early May.
— CZ ? Binance (@cz_binance) July 18, 2021
However, it looks like the latest massive BNB burn failed to make an impact on the token’s price. At the time of writing, BNB was trading at around $283—a far cry from its all-time high of $690 on May 10—and is down 7.6% on the day, according to crypto metrics platform CoinMarketCap.
Nonetheless, BNB is still the fourth-largest digital asset thanks to its market capitalization of roughly $47.5 billion.