Binance just BURN nearly#500million worth of $BNB, do you understand about coin burning and the impact of this event?

What is coin burning?

Burning coins, also known as burning coins, is the act of permanently removing a number of coins from the total supply, causing the total supply of coins to decrease.

To burn a certain number of coins, the developer will send those coins to wallet address 0x0000… or use a smart contract with a “burn” function to remove that number of coins from the total supply.

Binance has applied this function periodically every quarter and will automatically burn until the total supply of $BNB coin is only 100 million $BNB. Below is a statistical table of Binance's quarterly coin burns.

Statistics of Binance's coin exchanges

Typical forms of coin burning

  • Buyback and burn: Some projects will use revenue/profit from the model to buy back tokens on the market, and burn those tokens (OKX)

  • Burn part of transaction fees: Some L1 coins have a mechanism to burn part of transaction fees => less and less coins are produced (typically $ETH and $SOL) => supply decreases.

  • Periodic burning: Coins have a mechanism to periodically burn a certain number of coins (like $BNB).

Why does coin burning help holders?

  • Burning coins will help reduce the number of coins on the market. At that time, the supply is decreasing, and if the demand for coins increases => the price of the coin will increase.

  • Burning coins also shows the commitment of the project development team, helping holders strengthen their confidence in the project they are holding.

    => In general, burning coins brings more benefits than disadvantages to holders. However, many fraudulent projects that want to gain the trust of investors will also release this mechanism, so please research carefully before believing in any action from the project.

You can read more about coin burning and Binance's coin burning situation from this article: https://theblock101.com/burn-coin-la-gi