Published: 21.04.2022
Article reading time:
2 minutes.
FTX CEO Sam Bankman-Fried conducted a study on the mechanism of quarterly BNB burning and noted the deflationary effectiveness of the method.
Sam Bankman-Fried posted in a series of Twitter messages, which states that the method of quarterly BNB burning – an effective mechanism that regulates the speed of combustion in accordance with the asset price. To study the mechanism of anti-inflation Benkmana-Frieda pushed nineteenth burning BNB, in which the exchange has destroyed coins worth more than $ 741 million. Thereafter, CEO Binance Chanpen Zhao (Changpeng Zhao) said the quarterly burning makes coin BNB deflationary.
The head of FTX delved into the formula for burning and issuing BNB. He noted that the annual release of new coins depends on the price of the asset. The number of BNB burned annually will be approximately 7.142 million. Bankman-Fried sees the price of BNB as a vital factor in deciding what the burn rate will be in the coming years.
“If the price of BNB is over $1,000, then the total market capitalization should be around $200 billion,” he said.
Bankman-Fried predicts that $10 billion worth of BNB will be burned each year until 100 million coins remain. The burn rate of BNB is constantly adjusting along with its price. If the price rises above $1,000 per coin and 10 million BNB are burned every year, then $10 billion will disappear from the market. However, if the price of BNB decreases, this mechanism will reduce the total supply to 100 million coins over the next 7-10 years.
The FTX CEO called the mechanism “cool” and agreed that this quarter’s burn rate, excluding 1.7 million BNB from supply, is in line with the formula outlined by Binance. Note that there are currently 170 million BNB in circulation.
Last year, a real-time BNB burning mechanism was activated on the Binance Smart Chain network based on the BEP95 proposal. A fixed portion of gas fees will be burned in each block automatically.
Source: Bits
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