In brief

Coin burning is a mechanism used to remove cryptocurrency from circulation, permanently reducing total supply. Many cryptocurrency projects perform periodic coin burns to create a deflationary effect.

BNB applies two coin burning mechanisms. In the long term, this will reduce total supply by 50%. The first mechanism consists of burning a portion of BNB used as gas fees on Binance Smart Chain (BSC) (introduced in BEP-95). The second mechanism includes quarterly BNB burn events.

Previously, the quarterly BNB burn was based on BNB trading volume on the Binance exchange. But from December 2021, Binance announced that the Quarterly Burn mechanism will be replaced by a new BNB Auto-Burn mechanism (BNB Auto-Burn).

BNB's auto-burn mechanism will automatically adjust the amount of BNB burned based on the BNB price and the number of blocks created on BSC during the quarter. This brings greater transparency and predictability to the BNB community.


What is cryptocurrency burning?

Coin Burn is the process of permanently removing a number of cryptocurrency coins from circulation, reducing the total supply. In other words, the cryptocurrency is destroyed and can no longer be used in trading or anything else. 

By making cryptocurrencies more scarce, burning is intended to create a deflationary effect, increasing the value of the cryptocurrency and benefiting its holders. For BNB, the goal of burn events is to gradually reduce the total supply until it reaches less than 100 million BNB.

There are many ways to burn cryptocurrency, some projects implement a specific burning feature as part of the protocol. For example, BNB had a built-in smart contract burning function when it was first launched.

With the rise of Decentralized Finance (DeFi) protocols, coin burning has become more common in the blockchain space. Ethereum (ETH) started burning the ETH base fees of all blockchain transactions after implementing the London hard fork upgrade in 2021.

To burn coins, a certain amount of cryptocurrency is sent to a smart contract or wallet address that cannot be used to make transactions and does not have private keys. This means that once the coins are sent to the address, they are lost forever and thus removed from the available supply.

For more details on how coin burning works, read the article

 What is cryptocurrency burning?.


How is BNB burned?

BNB is the utility token that powers the BNB and BSC ecosystems. The total initial supply was 200,000,000 BNB, but this amount is gradually decreasing due to burning. Burn events will occur until 50% of the total supply is destroyed, causing the BNB number to drop below 100,000,000 coins. 

There are two methods to burn BNB. First are the quarterly BNB burn events. The second method introduced in BEP-95 involves burning a portion of BNB used as gas fees on Binance Smart Chain (BSC).

Previously, the quarterly BNB burn was based on BNB trading volume on the Binance exchange. But in December 2021, Binance announced a new automated BNB burning system. This mechanism helps BNB automatically adjust the amount of coins burned based on price and the number of blocks created on BSC each quarter. This brings greater transparency and predictability to the BNB community.


Burn BNB quarterly

As of January 2022, there have been 17 BNB burning events. A total of 33,199,679 BNB were burned, representing 16.59% of the total supply.

Coin Burn batches

BNB burned

BNB value approx

USD value approx

% of total supply

#1 (October 2017)

986.000

$ 1,52

1.500.000

0,49%

#2 (January 2018)

1.821.586

$ 21,96

40.000.000

0,91%

#3 (April 2018)

2.220.314

$ 13,52

≤ 30.000.000

1,11%

#4 (July 2018)

2.528.767

$ 12,93

$ 32.700.000

1,26%

#5 (October 2018)

1.643.986

$ 10,34

$ 17.000.000

0,82%

#6 (January 2019) 

1.623.818

$ 5,83

$ 9,400,000

0,81%

#7 (April 2019)

829.888

$ 18,79

$ 15.600.000

0,41%

#8 (July 2019)

808.888

$ 29,47

$ 23.800.000

0,40%

#9 (October 2019)

2.061.888

$17,80

$ 36.700.000

1,03%

#10 (January 2020)

2.216.888

$ 17,50

$ 38.800.000

1,11%

#11 (April 2020)

3.373.988

$ 15,55

$ 52.466.000

1,69%

#12 (July 2020)

3.477.388

$ 17,40

$ 60.500.000

1,74%

#13 (October 2020)

2.253.888

$ 30,17

68.000.000 USD

1,13%

#14 (January 2021)

3.619.888

$ 45,80

$ 165.791.000

1,81%

#15 (April 2021)

1.099.888

$ 541,25

$ 595.314.380

0,55%

#16 (July 2021)

1.296.728

$ 303,59

$393.673.653

0,65%

#17 (October 2020)

1.335.888

$478,68

$639.462.868

0,66%

TOTAL

33.199.679

-

$2.220.707.902

16,59%

BNB Burn History (Quarterly Coin Burn).

In quarter#18(January 2022), BNB completed its first quarterly automatic BNB burn. A total of 1,684,387.11 BNB have been removed from circulation, including 6296,305493 BNB that were burned in the Pioneer Burn Program. 

BEP-95 money burning mechanism

At the beginning of 2021, Binance CEO CZ shared plans to increase the BNB burning rate as the overall burning rate may be slower than he initially predicted. To speed up the process, Binance introduced a new burning mechanism through BEP-95 in November 2021.

BEP-95 is a Binance Development Proposal that adds a real-time burning mechanism to Binance Smart Chain (BSC). BSC automatically burns a portion of the gas fees collected by validators from each block. The more people use Binance Smart Chain, the more BNB will be burned, effectively accelerating the burning process.

Since January 2022, BSC has burned approximately 860 BNB per day and this progress can be followed on Twitter. Since BEP-95 depends only on the BSC network, it will continue to burn BNB even after reaching its goal of burning 100 million BNB. 


What is BNB Auto-Burn?

As mentioned, BNB Auto-Burn will automatically adjust the burn amount based on BNB price and BNB supply and demand dynamics. This means that if the price of BNB drops, the amount of BNB burned will increase.

BNB Auto-Burn is a mechanism that is both objective and verifiable. Its purpose is to provide greater transaction transparency and predictability. Unlike the Quarterly Burn, the automatic BNB Burn is independent of the BNB trading volume on the Binance exchange. Instead, it uses on-chain information from the BSC to calculate the amount to burn.

When the total circulating supply of BNB drops below 100 million, the automatic burning of BNB will stop. However, the BEP-95 mechanism will continue to burn BNB. The BNB auto-burn mechanism follows a formula based on data on the BSC chain of the total number of blocks created and the average price of BNB:

B represents BNB burned. N is the total number of BSC blocks produced in the quarter. P is the average BNB price and K is the fixed price (initially set at 1000). For more details on how this formula works, you can check out this blog post. 


How to check BNB Auto-Burn history?

Each burn event is publicly accessible on the blockchain and on the Binance website. You can also follow the burning situation on BNBBurn.info, a platform built by the BSC community.


summary

Since its launch in 2017, BNB has evolved in many ways as a utility token. The blockchain space is growing rapidly and so is the BNB and BSC ecosystem. The new BNB auto-burn mechanism will further enhance the BNB burning mechanism, improve its deflation and bring more transparency to the community.