What’s Behind Binance Coin Recent Growth?
Binance is the largest cryptocurrency exchange in the world, with a daily volume approaching $29 bln. It is no surprise that the projects of this giant, which was born in 2017, are most often successful. And above all, we are talking about Binance Coin (BNB), Binance's own cryptocurrency.
‘Home’ is best
BNB was once a ERC-20 token, but in 2019 it migrated from the Ethereum network to its own Binance Chain blockchain. It is now a BEP-2 token. The Binance DEX decentralized exchange and the recent Binance Smart Chain, a platform for creating dApps working with smart contracts, operate on the basis of the same blockchain.
History of success
The ICO, held on July 3, 2017, just days before the launch of the exchange, raised $17 mln. Of course, nowadays you won't surprise anyone with such volumes, but you can't even call it “modest”. In total, there were 200 mln BNB tokens, half of which were sold during the initial distribution, and the rest were reserved for various purposes – the scheme is typical. Mining/staking is not provided, the token will have to be bought or received as a salary, being an employee of Binance.
Initially, BNB cost only 10 cents per token. But the relevant marketing campaign, combined with the growth of the capital of the exchange, paid off. Soon BNB began to trade much more expensively, and the capitalization volumes began to grow to billions of dollars. Surprisingly, the rate of this token continued to rise even during the bitcoin recession in 2018.
Burn it, baby
What can be done with a successful digital asset that is in high demand and is generating more and more profit? Naturally — burn it! Soon after the launch of the coin, it was announced that Binance would periodically spend up to 20% of its profits to redeem and “burn” its own cryptocurrency until its amount is halved, to 100 mln. At first glance, the absurd decision was not at all unprecedented and was based on the ironclad logic of the fight against inflation – the lower the supply of something of value, the higher the demand will be.
This policy continues to this day. On January 19, 2021, the exchange "burned" slightly less than 3.7 mln of its tokens worth about $166 mln – a kind of record due to the success of Binance against the backdrop of another boom in the cryptocurrency market. True, the head of the exchange, Changpeng Zhao, is still dissatisfied with this rate — after all, even at such a tempo, it will take another 27 years to burn the BNB remaining to the cherished mark. That is why he does not rule out that in the future they will have to accelerate, even if it means a discrepancy with the growth rates of the exchange itself.
However, nowadays crypto optimism still reigns, and therefore I do not want to believe in the collapse of the largest exchange on the market. And the measures to create an artificial shortage of BNB inspire hope that the price of this token will rise in the future, or at least not fall too much during the correction.
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