The Different Ways of Burning Tokens, from Binance Coin (BNB) to HUH Token (HUH)
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On January 17th, Binance burned over 1.68 million BNB, which is equivalent to USD 792 million in today’s market. But how do Binance’s quarterly burns work - and do they differ from token burns carried out by its altcoin competitors, such as Ripple (XRP), HUH Token (HUH) and Stellar (XLM)?
Binance has a target of burning 100 million BNB tokens and is aiming to withdraw half of the total quantity of BNB from circulation, or 100 million tokens out of a total supply of 200 million. The amount burned today is equal to 0.84% of Binance's initial supply.
Burns like this one are designed to limit a cryptocurrency's supply while maintaining reasonable prices by increasing demand for the tokens already in circulation. Tokens are sent to an inactive address to perform burns. Binance began this practice in 2017 and the latest one marks the 18th burn.
Burn amounts were previously determined based on BNB usage and revenue earned by Binance's exchange. The 17th quarterly burn of BNB resulted in 1.34 million BNB being removed from circulation. Other burns have been as small as 808,000 BNB and as large as 3.6 million BNB. However, this quarter’s burn was the first to apply a new ‘Auto-Burn’ model, which bases the burn amount on market prices and the number of Binance Smart Chain blocks created.
The goal of this new model is to be more objective than the old one. Binance CEO, Changpeng Zhao, stated that the Auto-Burn model will allow “greater autonomy, transparency and predictability.” The Chinese-Canadian business executive is known for striving for transparency in Binance operations. After receiving feedback from the community, the new
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