Binance has always been committed to promoting the development of the blockchain ecosystem.

In recent years, thanks to the good interaction with the community, the blockchain ecosystem has made great progress. BNB, like other community-supported projects, has embarked on its own evolutionary journey. Binance listened carefully to the voices from Binance Smart Chain (BSC) and the BNB community, and decided to launch a new mechanism for automatic BNB destruction.

BNB itself is a well-run ecosystem. In order to better safeguard the interests of the BSC and BNB communities, Binance today announced the adoption of a new BNB automatic destruction mechanism, aiming to work with the BSC and BNB communities to promote a healthier blockchain ecosystem.

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What is BNB? What role does it play in the blockchain ecosystem?

BNB is the native token of BSC (similar to Ethereum’s GAS) and is the “fuel” for all transactions on the blockchain. At the same time, it is also a token necessary to participate in the governance of the BSC decentralized chain. Binance does not have any control or operating rights over BSC.

BSC (and BNB) is supported by community users, developers, verification nodes, commissioned nodes, etc. In addition to on-chain transaction fees and other on-chain purposes, BNB is also widely accepted by various transaction platforms and merchants as a form of payment. Binance accepts BNB payments, but cannot decide who can get BNB and how to use BNB. Click here to view the list of applications that are not related to Binance but accept BNB.

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How to operate the BNB automatic destruction mechanism?

There are currently two BNB destruction mechanisms. The first mechanism is BEP95, which will destroy part of the BNB as transaction fees on the BSC in real time. Since the Bruno upgrade of BSC on November 30, 2021, approximately 860 BNBs have been destroyed every day . The second is the accelerated destruction mechanism of BNB, which is destroyed on a quarterly basis. Last quarter was the first 7 times BNB destroyed, a total of 1,335,888 pieces of BNB out of circulation.

In the future, the quarterly destruction mechanism of BNB will be replaced by an automatic destruction mechanism, which can improve the transparency and predictability of BNB destruction. The new automatic destruction mechanism is objective and verifiable, and is no longer tied to the profit of the Binance Exchange. It will automatically adjust the burned quantity according to the BNB price, reflecting the supply and demand of BNB and the number of blocks produced in the quarter (based on the information on the chain). The specific calculation formula is as follows:

B = N × 1000 / (P + K)

In the above formula, B represents the amount of BNB burned; N represents the total amount of BSC blocks produced in the quarter. ① P represents the average dollar price of BNB. ② K is a constant value as a price anchor, and the initial value is set to 1000. ③When the total amount of BNB in ​​circulation is less than 100 million, the automatic BNB destruction mechanism will stop operating.

① The general block generation speed of BSC is 3 seconds, and approximately 1200 blocks can be produced in one hour (3600 seconds per hour, divided by 3). According to a quarter, there are 3 months, and each month has 30 days. The value of N is approximately 3600 ÷ 3 × 24 × 30 × 3 = 2,592,000, where 24 is the number of hours in a day, 30 is the number of days in a month, and 3 is one The number of months in the quarter.

②P is the median of the sample given by the mainstream oracle price provider on the BSC (such as ChainLink ). The sampling interval is 10,000 blocks, which is about 8.3 hours.

③K value will change according to the BEP proposal on BSC and the result of community voting.

The figure below shows the estimated amount of destruction corresponding to different average prices of BNB under the automatic destruction mechanism. After the BNB automatic destruction mechanism is implemented, the expected amount of destruction calculated according to the above formula will be disclosed.

the estimated amount of destruction corresponding to different average prices of BNB under the automatic destruction mechanism.

Since its launch in 2017, BNB has actively developed in a variety of ways with the promotion and support of the community. Binance believes that this new automatic destruction mechanism will open a new stage of development for BNB and BSC. More importantly, it will contribute to BNB innovation, so as to continuously push forward block chain ecosystem of development.

Here, Binance would like to thank the community for its continuous support and contribution to the construction of the ecosystem. Innovation never ends, construction never stops!

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