Binance draws inspiration from Ethereum to drive value from Binance Coin

Like Ethereum, the developers of Binance Smart Chain (BSC) offer a measure with a deflationary effect. Part of the gas costs will thus be burned, reducing the supply of BNB.

Ethereum’s hard fork, aka London, has been operational for several months now. This major update was an opportunity for developers to introduce a new mechanism.

1xbit

Concretely, EIP-1559 reduces gas costs by burning part of them. Thus, approximately 3.7 ETH is burned every minute. The effect of this update is said to be deflationary. It helps to reduce the supply of Ether and therefore to increase the value of the asset.

Burnt gas costs and no longer distributed

And obviously the rise in the price of ETH inspires other blockchains, in particular the developers of Binance Smart Chain (BSC). They propose to be directly inspired by this mechanism to apply it to Binance Coin.

With the BEP-95 proposal, the developers plan to introduce a real-time “burn” system of part of the amount of BNB obtained by BSC actors during the staking process.

This is to reduce gas costs in order to reduce the supply of tokens, while increasing demand. The key, the developers hope, is a rise in the price of Binance’s crypto-asset.

BEP-95 could therefore have as a direct consequence a reduction in the number of tokens received by validators and blockchain delegates thanks to staking. Note that this mechanism will be framed by the introduction of parameters subject to the governance of the network.

Another deflationary leverage for BNB

These settings will apply to two smart contracts governing the collection of gas charges. If this update proposal is validated, the BNB would therefore further strengthen its deflationary nature.

Remember that Binance burns a defined part of the BNB offer at regular deadlines. These operations take place every three months and aim to maintain the value of the token.

Binance should in principle stop using these token destruction actions once 50% of the initial offering has been destroyed. There will then be only 100 million tokens available.

The last burn (the 17th since the creation of the BNB) dates back a week and involved 1.3 million tokens. This was equivalent to $ 640 million. This announcement around the BEP could have the effect of pulling the value of the short-term asset, already up 40% over 30 days.

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