What is coin burn?
Token burning is the process of permanently removing cryptocurrencies from circulation, thereby reducing the total supply. For clarity on how it works, let’s take Binance Coin (the old ERC-20 BNB) as an example.
While Binance Coin was still on the Ethereum network, Binance regularly carried out token burns using a smart contract feature called burn functions. The BNB burning event is carried out on a regular basis every quarter until the final burning of 100 million BNB, which is as high as 50% of the total BNB issuance (200 million).
The amount of BNB to be destroyed is determined by the number of transactions on the trading platform within 3 months. After each quarter, Binance burns Binance Coin based on overall trading volume.
However, there still seem to be quite a few people who have difficulty understanding how token burns are performed. To that end, we have published this article, which introduces the burn function and Binance Coin quarterly burn event.
How does it work?
In general, token burn events take place in the following order:
- Whenever the burn function is called, it means that the cryptocurrency holder wishes to burn a specific amount of tokens.
- The smart contract then verifies that there are tokens in the person’s wallet and that said number of tokens is valid. The destruction mechanism only allows positive numbers.
- If the number of tokens in the person’s wallet is insufficient or the said number is invalid (for example, 0 or -5), the burn function cannot be executed.
- If the amount is sufficient, the tokens will disappear from the wallet. The total supply is then updated, indicating that the tokens are permanently destroyed.
If the token is destroyed by executing the destroy function, the token will be completely destroyed and cannot be recovered. Thanks to blockchain technology, the proof of destruction can be easily verified by a blockchain browser.
In other words, the BNB contract has a built-in destruction function that can be used by everyone at any time. By calling this function, a specific amount of tokens can be permanently removed from the circulating supply. As mentioned earlier, every token burn event is recorded as a blockchain transaction. The destruction mechanism is open and transparent, and everyone can verify that the tokens have been successfully destroyed.
When the quarterly token burn event is carried out, Binance will issue an official announcement stating the amount of BNB burnt (based on the quarterly volume). All ERC-20 BNB token burn transactions can be verified through an Ethereum blockchain browser such as Etherscan. The destruction transaction is transparent and irrevocable, and will be permanently recorded in the blockchain.
Details of the destruction transaction can be viewed through the Etherscan input data frame.
Click ” Decode Input Data ” to view the amount of BNB that has been destroyed. The number contains 18 decimal places. Therefore, the number of BNB burned in this example is 1,623,818.
Go to Binance Official Website
Current Binance Burn Function
Since the launch of BNB Beacon Chain, ERC-20 BNB tokens have been gradually replaced by native Binance Coin (BNB BEP-2). This means that the token burn event has been transferred from the Ethereum network to the BNB Beacon Chain.
Notably, all ERC-20 BNB tokens burned have been “copied” to the BNB Beacon Chain, ensuring that the total supply remains consistent. Therefore, the 11,654,397 ERC-20 BNB tokens that were previously destroyed in the Ethereum network were also destroyed on the BNB Beacon Chain ( the destruction was completed immediately after the mainnet launch). The specific destruction transaction can be viewed in the BNB Beacon Chain browser. Additionally, you can view the total supply of BNB.
The current BNB destruction mechanism no longer relies on smart contracts but executes specific commands in the BNB Beacon Chain. For more details, please visit the BNB Beacon Chain documentation page.
As of April 2022, Binance has completed a total of 19 BNB burn events. The total amount of BNB burned reached 36,723,852.37, and the total supply decreased by 18.36% (the current supply is 163,292,674.61).
| Token Burn | BNB burn amount | BNB price (approx) | USD value (approx) | % of total supply |
|---|---|---|---|---|
| 1st time (October 2017) | 986,000 | $1.52 | $1,500,000 | 0.49% |
| 2nd time (January 2018) | 1,821,586 | $21.96 | $40,000,000 | 0.91% |
| 3rd time (April 2018) | 2,220,314 | $13.52 | $30,000,000 | 1.11% |
| 4th (July 2018) | 2,528,767 | $12.93 | $32,700,000 | 1.26% |
| 5th time (October 2018) | 1,643,986 | $10.34 | $17,000,000 | 0.82% |
| 6th (January 2019) | 1,623,818 | $5.83 | $9,400,000 | 0.81% |
| 7th time (April 2019) | 829,888 | $18.79 | $15,600,000 | 0.41% |
| 8th (July 2019) | 808,888 | $29.47 | $23,800,000 | 0.40% |
| 9th (October 2019) | 2,061,888 | $17.80 | $36,700,000 | 1.03% |
| 10th (January 2020) | 2,216,888 | $17.50 | $38,800,000 | 1.11% |
| 11th (April 2020) | 3,373,988 | $15.55 | $52,466,000 | 1.69% |
| 12th (July 2020) | 3,477,388 | $17.40 | $60,500,000 | 1.74% |
| 13th (October 2020) | 2,253,888 | $30.17 | $68,000,000 | 1.13% |
| 14th (January 2021) | 3,619,888 | $45.80 | $165,791,000 | 1.81% |
| 15th (April 2021) | 1,099,888 | $541.25 | $595,314,380 | 0.55% |
| 16th (July 2021) | 1,296,728 | $303.59 | $393.673.653 | 0.65% |
| 17th (October 2020) | 1,335,888 | $478.68 | $639,462,868 | 0.66% |
| 18th (January 2022) | 1,684,387.11 | $474 | $798,399,490 | 0.84% |
| 19th (April 2022) | 1,839,786.26 | $403.22 | $741,840,738 | 0.91% |
| Total | 36,723,852.37 | – | $3,760,948,130 | 18.36% |
Please check Binance official website or contact the customer support with regard to the latest information and more accurate details.
Binance official website is here.
Please click "Introduction of Binance", if you want to know the details and the company information of Binance.
Comment by Hans
April 24, 2024
as I am trading here various assets, for me it's the most important feature. i mean, flexibility in tradable markets. i alternate trading styles, meaning that sometimes I trad...