Following in the footsteps of Ethereum, which recently incorporated a rate burning system with EIP-1559, Binance Smart Chain developers want to add something similar to that blockchain.
It is Binance Evolution Protocol (BEP) number 95. This proposal consists of a mechanism for burning BNB , a cryptocurrency native to this network. If the BEP-95 is approved, part of the fees that are paid (10%, according to the proposal), instead of going to the validators, will be destroyed, which will lead to a reduction in the cryptocurrency’s circulation.
Currently, BNB burning is already done on a quarterly basis and the number of coins destroyed is related to the commissions paid on the centralized exchange Binance . CriptoNoticias has reported some of these burns that, at times, exceeded the equivalent of USD 500 million.
The objective of destroying BNB and reducing its working capital is to increase the scarcity of the asset. . In a context of growing demand, if the supply is reduced, the price should increase.
«Although the implementation of this BEP could decrease the total amount of BNB that validators and delegators receive for doing staking, the fiat denominated value of your rewards you can bet on, ”Binance explains on its official blog. “This burning mechanism would further reduce the supply of BNB; therefore, increased demand would raise the value of BNB, “they add.
A recent example of how this It works, is what happened days ago with UBI, a basic income token in Ethereum. The burning of 8% of its currency by the creator of Ethereum, Vitalik Buterin, produced a increase in its price that exceeded 3,000% in less than an hour .
Regarding BNB, the CoinMarketCap website shows that, at the time of writing this article, its currency is 166,801,148 units. The Binance exchange commission burnouts will occur until just 100,000 BNB remain. With the BEP-95, these burns would continue and, thus, the reduction of its working capital would continue in progress .
It is worth clarifying that, although the BEP-95 bears some similarity to Ethereum’s EIP-1559, they are not the same. The Ethereum proposal added a system for paying tips to miners, which will not exist in the Binance Smart Chain.
How is a proposal voted on the Binance Smart Chain?
For the BEP-95 to be approved it is You need to pass a voting process that relies on the power of validators. This power is determined by how many BNBs they have staked .
The BSCscan website shows that, at the time of publication of this article, the Binance Smart Chain has 44 validators, of which only 21 are active . Those with the highest voting power are Namelix, BSCscan itself and Ciscox ..
For now, the BEP-95 is in what is called the “draft” phase. You must receive a minimum initial deposit of 2,000 BNB (which is then returned to voters) for voting to be enabled.
In voting, validators must choose between ‘yes’ or ‘no’ . The answer that exceeds 50% of the voting power will determine what is done with this proposal: if it is approved or rejected.