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Cryptocurrency exchange Binance has finished its quarterly token burn, destroying a total of 3,691,888 Binance Coin ($BNB), worth roughly $165.8 million, according to an announcement published today.
According to Binance CEO Changpeng Zhao, around 2.4 times more tokens were burned this time in terms of fiat value—compared to the previous event. Binance burns large amounts of $BNB every quarter, helping to reduce its available supply—which, in theory, can boost its price if demand stays steady.
Just as The Block’s director of research Larry Cermak predicted a few hours earlier, the latest burn is the biggest so far. This can be explained by Binance’s growing spot and futures trading volumes over the last quarter of 2020, he said at the time.
We are going to see a massive $BNB burn today. By my estimations, likely about twice larger than the previous quarterly all-time high.
Why? Binance's spot volume is up more than 50% and futures volume is up 140% in Q4. pic.twitter.com/iuBBtOxkin
— Larry Cermak (@lawmaster) January 19, 2021
“Why? Binance's spot volume is up more than 50% and futures volume is up 140% in Q4,” Cermak tweeted, adding, “Quarterly volume reached an all-time high by far. About $471.5 billion in Q4.”
Cermak explained that Binance has become the “de facto” platform for futures trading—after BitMEX “fell”—and its futures trading volume in December alone has exceeded the entirety of Q3 2020.
As Binance’s CEO Changpeng Zhao stated previously, the growing scale of burns represents “significant growth,” since the amount of $BNB burned each time is based on the number of trades performed on the exchange per quarter. (The burn used to be officially tied to the exchange's revenue but mention of this was removed from the whitepaper).
Just a day prior to the burn, the price of $BNB reached a new all-time high of $46.81, according to crypto metrics platform CoinGecko. This could’ve been a sign of anticipation since token burns usually give $BNB’s price a boost by decreasing its total supply.
As Decrypt reported, Binance commenced its previous token burn on October 17. The platform destroyed $36.7 million worth (at the time) of $BNB. The exchange removed two million $BNB from circulation that time, shrinking the total supply to 185,474,825. Before that, Binance burned just over 800,000 $BNB in July 2020.
According to Binance’s initial plan, the exchange will continue its quarterly burns until there are 100 million $BNB left—or 50% of the total number of tokens that were ever issued.