Embattled cryptocurrency exchange Binance has decided to burn almost 1.3 million BNB tokens ($380 million) according to a recent press release via Twitter. The move will make BNB tokens slightly scarcer and according to the exchange’s calculations, increase its appeal. However, coin burns are sometime seen as a desperate measure from a blockchain network and it remains to be seen how effective they will be in the near future.
Binance Under Pressure?
Binance is being targeted around the world especially in Europe. The Hong Kong-based cryptocurrency exchange has been penalized in the past for distorting trading data as well as other fines. At first, some of its services including but not limited to derivatives trading were banned by regulators. Later on, the exchange’s users started facing problems for fiat withdrawals including ones based in Netherlands, Germany and the UK itself. So, it is no wonder that the exchange is apparently under pressure from government agencies and they are looking to mitigate these moves by some desperate measures.
1.3 Million BNB Burned
One of these measures apparently to make Binance enticing for investors and traders is the economics of Binance Coin (BNB). BNB is among the top 10 cryptos of the world and one of the most lucrative projects of the exchange itself. Its usage is nothing more than utility token whose holders are charged less fees on the Binance exchange service.
According to a tweet from Binance CEO Chengpeng Zhao:
— CZ 🔶 Binance (@cz_binance) July 18, 2021
Why Binance is Burning its Own Tokens?
The exchange is continuing on with a policy to burn 20% of exchange profits every quarter to make the BNB token much more attractive for the end user to own and hold on to. This is the second largest burn in Binance’s history after March in which more than $600 million worth of BNB tokens were burned. There are a total of Token burns by managing teams is nothing new. Recently, Ethereum has also planned to burn a portion of Ethereum transaction fees to make the system more appealing for long-term holders.
Binance reached an all-time high of around $686 per token in April but it has since been on a downward trend. It is currently being traded below $300.
Image Source: Binance