NEW DELHI: Binance Smart Chain (BSC), the Binance-backed decentralized blockchain platform announced on October 22 its plans to introduce a real-time coin burning with the new Binance evolution protocol (BEP-95).
According to BSC developers, the real-time burning mechanism proposal would benefit both validators and holders due to the increased value of tokens caused by burning. BSC is the second crypto network after Ethereum to opt for coin burning for inflating its price.
The BEP-95 is also quite similar to EIP-1559, the coin burning feature introduced in Ethereum with the London Hard Fork upgrade. BEP-95 is still being drafted and hasn’t been finalized yet.
According to the Binance blog, BEP-95 and BSC will work in a co-ordinated fashion and the new protocol will benefit the network in the following ways:
* BEP-95 burn is totally dependent on the working of the Binance Smart Chain (BSC) network and it will continue decreasing BNB supply even after the scheduled BNB burns reach the target supply of 100 million tokens in circulation.
* It will speed up the burning process of BNB tokens.
* BEP will make BSC more decentralised as a part of the gas fees will be burnt.
* BNB burning process will be facilitated by the BSC network, leading to improvement of its intrinsic value.
* The scarcity caused due to burning would make BNB tokens more competitive and sustainable in the market.
However, each BNB block will burn a fixed ratio of the gas fee collected by the validators in each block. The burning ratio can be changed through governance.
The proposal BEP-95 would burn some of the fees that users spend to make transactions or to interact with smart contracts on the network. Normally these fees go to validators as rewards for securing the network. BNB supply is capped at 200 million.
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