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Introducing BNB Auto-Burn: A New Protocol for Quarterly BNB Burns

Introducing BNB Auto-Burn: A New Protocol for Quarterly BNB Burns

2021-12-22 14:00
Fellow Binancians,
Over the past few years, the blockchain ecosystem has evolved in many ways as a result of the community’s feedback. Following in the footsteps of many other community supported projects, BNB has been on its own evolutionary journey towards greater innovation. At Binance, we’ve been listening closely to the BSC and BNB communities and we are proud to announce the implementation of a new BNB Auto-Burn procedure effective immediately.

Going forward, the quarterly burn will be replaced with BNB Auto-Burn to provide greater transparency and predictability to the BNB Community. BNB Auto-Burn will be both objective and verifiable, independent of revenues generated on the Binance CEX through the use of BNB and will be automatically adjusting in that the burn amount will be based on the price of BNB, which, in turn, reflects the supply and demand for BNB, as well as the number of blocks produced during a quarter calculated on the basis of on-chain information. The formula will be as follows:
B is the amount of BNB to burn. N is the total number of blocks produced on BSC during the calendar quarter*. P is an average price of BNB against the US dollar**. K is a constant value as a price anchor, initially set at 1,000***. BNB Auto-Burn will be halted when the total circulation of BNB drops below 100 million.
* BSC’s typical block time is about 3 seconds, so the number of blocks produced in an hour would be approximately 1,200 (3,600 seconds per hour, divided by 3). Assuming there are three thirty-day months in a calendar quarter, N should be approximately 3,600 ÷ 3 × 24 × 30 × 3 = 2,592,000, where 24 is the number of hours in a day, 30 the number of days in a month, and 3 the number of months in the quarter.
** P is the median value of a sampling on a widely accepted oracle price provider (e.g., ChainLink) on BSC, and the sampling frequency is every 10,000 blocks, which is currently equivalent to approximately 8.3 hours.
*** The value of K is subject to change through a BSC BEP proposal and community vote.
The chart below shows the expected quarterly BNB Auto-Burn amount for a range of BNB average prices. After implementation of BNB Auto-Burn, the projected burn amount based on the above formula will be publicly available.
For more information on the BNB Auto-Burn, please refer to our blog post.
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Binance Team
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