- Binance Smart Chain is working to introduce BEP-95, with a real-time burning mechanism for BNB.
- The exchange hopes to achieve better decentralization while increasing BNB’s value.
On October 22, Binance released an announcement on its Github page and blog, presenting the BEP-95 with a real-time burning mechanism. The Binance Evolution Protocol, dubbed BEP-95, will bring a new age to the Binance Smart Chain, improving the tokenomics of the Binance coin (BNB). Furthermore, the largest exchange globally sees this upgrade as a boost to the economic structure of the Binance Smart Chain.
Burning has become a popular mechanism to make digital currencies deflationary. Token burning involves a network locking a particular percentage of coins in an inaccessible address, thus removing them from circulation. Deflationary tokens tend to increase in value more than inflationary due to the law of supply and demand.
According to Binance, the BEP-95 mechanism will help the chain to achieve truer decentralization. It will also follow the same track even after the current burning mechanism achieves its objective of leaving 100 million BNB in circulation; this number stands for 50% of the total BNB in circulation. However, the exchange clearly states that the mechanism is yet to roll out as it needs more improvement.
The 17th BNB burn
On October 18, the exchange rounded up the 17th burn of its native token, conducted on the last quarter of this year. Binance maintains this process every quarter, removing from circulation 20% of its quarterly profits. The platform managed to burn a staggering 1.3 million BNB, equivalent to around $640 000 000.
In the 3rd quarter of 2020, Binance also introduced its Pioneer Burn Program, supporting users who lose their assets on Binance. There are a few steps you need to pass to be eligible for its help. You should submit your claims through its customer support, leading to an investigation, and take the necessary actions.
Binance managed to remove 17 839 BNB from circulation during this quarterly burn through the Pioneer Burn Program. BNB saw an upsurge concerning this incident, expected to continue if the current plan falls in place.
Mixed reception concerning BEP-95
The burning ratio of BNB in the BEP-95 upgrade falls in the hands of BSC validators; at the moment, it is at a preset percentage of 10. According to the exchange, the burning mechanism is necessary to improve its coin’s value and demand. Furthermore, it will readjust staking rewards for delegators and validators.
There will be gas fees collected from each block, later burning a fixed ratio of the same. Binance will then divide the gas fees between the System Reward Contract and the ValidatorSet contract. Distribution will be every day, depending on a validator or delegator.
While some are openly accepting this BEP-95 draft, others remain skeptical of its relevance. One developer states that the BSC does not require a similar mechanism to Ethereum’s EIP-1559 upgrade. According to him, the continuous deflation could risk the economic structure of BSC.
However, before the launch of the BEP-95 program, more exposure to Binance’s plans will shed more light on its progress.