Real-time Destruction of BNB: Understanding BEP95 Mechanism
According to reports, according to BSCScan data, the real-time destruction amount of BNB has exceeded 160000 pieces, and currently about 160241 pieces. BNB\’s re
According to reports, according to BSCScan data, the real-time destruction amount of BNB has exceeded 160000 pieces, and currently about 160241 pieces. BNB’s real-time destruction mechanism was proposed by BEP95, similar to Ethereum’s current EIP-1559 destruction mechanism.
Data: BNB’s real-time destruction exceeded 160000 pieces
Overview
– Introduction to Binance Coin (BNB)
– Real-time Destruction Mechanism
– Importance of Destruction Mechanism
– Comparison with Ethereum’s EIP-1559
Binance Coin (BNB)
Binance Coin (BNB) is a digital asset that powers the Binance ecosystem. It was launched in 2017 as an ERC-20 token on the Ethereum blockchain, but later migrated to its own blockchain, Binance Chain, in 2019. BNB has various use cases, such as paying trading fees on Binance exchange, buying goods and services, and participating in token sales on Binance Launchpad.
Real-time Destruction Mechanism
Binance Chain uses a unique mechanism to reduce the total supply of BNB over time. This mechanism, known as real-time destruction, burns a portion of the circulating supply of BNB every quarter. The destruction amount is calculated based on the trading volume on Binance exchange in the previous quarter. The higher the trading volume, the more BNB is burned. The destruction process is transparent and can be tracked on BscScan, a blockchain explorer for Binance Chain.
According to reports, as of September 2021, the real-time destruction amount of BNB has exceeded 160,000 pieces, with currently about 160,241 pieces destroyed. This means that more than $1.6 billion worth of BNB has been permanently removed from circulation. The destroyed tokens cannot be recovered or reused, making the remaining BNB more valuable over time.
Importance of Destruction Mechanism
The real-time destruction mechanism has several important benefits for Binance Coin holders and the wider cryptocurrency community. Firstly, it helps to maintain the scarcity and value of BNB, as the supply is reduced over time. This is crucial for long-term investors who want to hold a valuable and appreciating asset. Secondly, it incentivizes users to trade on Binance exchange, as the more trading volume, the more BNB is burned. This creates a virtuous cycle of demand and supply, where more users buy and trade BNB, leading to more burning and scarcity.
Lastly, the real-time destruction mechanism is a transparent and fair way to distribute the benefits of Binance’s success to the BNB holders. By burning a portion of the trading fees generated by the exchange, Binance is effectively sharing its profits with the community. Furthermore, the destruction process does not require any action from the users, making it easy and hassle-free.
Comparison with Ethereum’s EIP-1559
BEP95 mechanism is similar to Ethereum’s EIP-1559 destruction mechanism. Ethereum’s upgrade, released in August 2021, aims to address the rising transaction fees on the network by introducing a new fee model. Under EIP-1559, each transaction includes a base fee and a tip, with the base fee being burned and the tip going to the miner who included the transaction in the block. This mechanism also reduces the total supply of Ether (ETH) over time, making it a deflationary asset just like Binance Coin.
However, there are several differences between BEP95 and EIP-1559. Firstly, the frequency of burning for Binance Coin is quarterly, while for Ethereum it is per block. This means that the effect of the mechanism on the supply is more visible and frequent for Ethereum. Secondly, the base fee in Ethereum is variable and determined by the network congestion, while in Binance Chain it is fixed at 100 Gwei. This makes the BEP95 mechanism more predictable and stable.
Conclusion
In conclusion, Binance Coin’s real-time destruction mechanism is a unique and innovative feature that sets it apart from other cryptocurrencies. It offers several benefits, such as maintaining scarcity, incentivizing trading, and sharing profits with the community. The comparison with Ethereum’s EIP-1559 shows that both mechanisms aim to achieve similar goals, but have different implementation details. Overall, the real-time destruction mechanism is a promising and exciting development for Binance Coin and the wider crypto community.
FAQs
1. How does Binance calculate the amount of BNB to be burned every quarter?
– Binance calculates the amount of BNB burned by taking 20% of its profit for the quarter and purchasing BNB from the market to be burned.
2. How does the real-time destruction mechanism affect the price of BNB?
– The real-time destruction mechanism reduces the total supply of BNB over time, making it a more scarce asset. This can potentially increase the price of BNB, especially if demand remains constant or increases.
3. Can the real-time destruction mechanism be changed or removed?
– The real-time destruction mechanism is part of the Binance Chain protocol and requires a hard fork to be changed or removed. However, there is no indication from Binance that it plans to do so in the near future.
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