Summary

Token destruction is a mechanism that removes cryptocurrencies from circulation, thereby permanently reducing the total supply. Many cryptocurrency projects periodically perform token destruction in order to create a deflationary effect.

BNB uses two token destruction mechanisms with the long-term goal of reducing the total supply by 50%. The first is BEP-95, which destroys part of the BNB used as fuel fees in the Binance Smart Chain (BSC). The second is a quarterly BNB destruction event.

Previously, the quarterly BNB destruction was based on the BNB trading volume on the Binance exchange. But in December 2021, Binance announced that the quarterly destruction will be replaced by a new BNB automatic destruction.

The BNB automatic destruction mechanism will automatically adjust the amount of BNB destroyed based on the BNB price in the quarter and the number of blocks produced by Binance Smart Chain (BSC). This will increase transparency and predictability for the BNB community.


What is token burning?

Token destruction refers to the process of permanently removing cryptocurrencies from circulation to reduce the total supply of tokens. In other words, after the tokens are destroyed, they can no longer be used for transactions or other purposes.

Token destruction causes a shortage of tokens, which creates a deflationary effect and potentially increases the value of cryptocurrencies, benefiting holders. The goal of the BNB token destruction activity is to gradually reduce the total supply of BNB to less than 100 million.

There are many ways to destroy cryptocurrencies, and some projects will perform specific destruction functions as part of the protocol. For example, BNB came with a smart contract destruction function when it was first launched.

With the rise of decentralized finance (DeFi) protocols, token destruction is becoming increasingly common in the blockchain space. Ethereum (ETH) began destroying the Ethereum base fee for all blockchain transactions after implementing the London hard fork upgrade in 2021.

In order to destroy tokens, a certain amount of cryptocurrency will be sent to a smart contract or wallet address that cannot be traded and does not have a private key. This means that once the tokens reach these addresses, they will be lost forever, thus completely removed from the existing supply.

To learn more about how token burning works, please read

ใ€ŠWhat is token destruction? ใ€‹.


How to destroy BNB?

BNB is the utility token that sustains the Binance Coin and Binance Smart Chain (BSC) ecosystems. The initial total supply of BNB is 200 million, which will be gradually reduced through token burns. The burn activity will continue until 50% of the total supply is destroyed, that is, it is reduced to less than 100 million BNB.

There are two ways to destroy BNB. The first is the quarterly BNB destruction event. The second is BEP-95, which destroys part of the BNB used as fuel fees in the Binance Smart Chain (BSC).

Previously, quarterly BNB destruction was based on the BNB trading volume on the Binance exchange. But in December 2021, Binance announced the launch of a new BNB automatic destruction. The BNB automatic destruction mechanism will automatically adjust the amount of BNB destroyed based on the BNB price and the number of blocks produced by the Binance Smart Chain (BSC) each quarter. This will increase the transparency and predictability of the BNB community.


BNB quarterly destruction

As of January 2022, BNB has completed 17 destructions, with a total destruction of 33,199,679 pieces, accounting for 16.59% of the total supply.

Token Burning

BNB destroyed

BNB price (approximately)

USD value (approx.)

Total supply share

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%

The 3rd time (April 2018)

2,220,314

$13.52

$30,000,000

1.11%

4th time (July 2018)

2,528,767

$12.93

$32,700,000

1.26%

The 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 (April 2019)

829,888

$18.79

$15,600,000

0.41%

The 8th time (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%

total

33,199,679

-

$2,220,707,902

16.59%

BNB destruction record (quarterly token destruction).

The 18th quarterly destruction in January 2022 is the first automatic destruction of BNB. A total of 1,684,387.11 BNBs were withdrawn from circulation, of which 6296.305493 BNBs were destroyed in the Pioneer Burn Program.

BEP-95 destruction mechanism

In early 2021, Binance CEO Changpeng Zhao (CZ) said that the overall destruction rate was lower than initially expected, so he shared plans to accelerate BNB destruction. To speed up the process, Binance introduced a new BEP-95 destruction mechanism in November 2021.

BEP-95 is a Binance Improvement Proposal that adds a real-time destruction mechanism to the Binance Smart Chain (BSC). The Binance Smart Chain (BSC) will automatically destroy part of the gas fees collected by validators from each block. The more Binance Smart Chain users there are, the more BNB will be destroyed, which will effectively speed up the destruction process.

As of January 2022, Binance Smart Chain (BSC) is destroying about 860 BNB per day, and progress can be tracked via Twitter. BEP-95 is completely dependent on the Binance Smart Chain (BSC) network and will continue to destroy BNB even if the destruction target of 100 million is reached.


What is BNB automatic destruction?

As mentioned above, BNB automatic destruction automatically adjusts the destruction amount based on the price and supply and demand dynamics of BNB. That is, if the price of BNB falls, the destruction amount of BNB will increase.

BNB Auto-Destruction is both objective and verifiable, and is designed to improve the transparency and predictability of transactions. Unlike the quarterly destruction, BNB Auto-Destruction is not related to the BNB trading volume on the Binance exchange. Instead, BNB Auto-Destruction uses the on-chain information of the Binance Smart Chain (BSC) to calculate the destruction amount.

When the total circulating supply of BNB drops below 100 million, BNB automatic destruction will stop. However, the BEP-95 mechanism will continue to destroy BNB. The BNB automatic destruction is calculated based on the total block output Binance Smart Chain (BSC) on-chain data and the average price of BNB. The formula is as follows:

B represents the amount of BNB to be destroyed. N represents the total number of blocks produced by Binance Smart Chain (BSC) this quarter. P is the average price of BNB, and K is the constant price anchor, initially set to 1000. For a detailed understanding of how the formula works, please read this blog post.


How to view BNB automatic destruction history?

All burn events are publicly accessible through the blockchain and Binance.com. BNBBurn.info, built on Binance Smart Chain (BSC), can also track burn information.


Summarize

Since its launch in 2017, BNB has evolved into a utility token in many ways. The blockchain space, including the BNB and Binance Smart Chain (BSC) ecosystems, has grown rapidly. The new BNB Auto-burn will further strengthen the BNB burn mechanism, improve its deflationary properties, and increase transparency for the community.