Binance has launched a new Binance improvement protocol proposal called Binance Evolution Protocol (BEP-95). Accordingly, this is a mechanism for real-time writing, taking the effects to the Binance Smart Chain (BSC) economic model, making BNB’s tokenomics more dynamic. Also, it is a mechanism similar to the one currently used in Ethereum.
What is Binance Evolution Protocol (BEP-95) and why does BSC need it?
Binance Evolution Protocol (BEP-95) is an idea that helps speed up the burning of BNB, with a real-time burning mechanism, it helps make BSC more decentralized as part of the gas fee. The BEP-95 write is dependent solely on activity on the BSC network and will continue to work even after Binance completes its planned BNB burn (reducing the BNB supply), reaching its target of spending 100 million BNB in circulation.
Currently, the BEP is still in the draft stage.
- Each block will burn a flat rate of the gas fee collected by the validators in each block.
- The burning rate can be adjusted through governance.
By burning a portion of the gas fee, BSC can accelerate the burning of BNB and improve its intrinsic value. BNB holders will decide how BSC gas rewards will be sent.
While the implementation of BEP may reduce the total amount BNB validators and delegates get from staking, the value of the token may increase over time. This burning mechanism will further reduce the supply of BNB. As a result, increased demand will result in a higher BNB value.
The mechanism will be enabled by introducing Governable parameters in the ValidatorSet Contract: burnRatio.
- Distribution of gas fees
According to the whitepaper, BNB is a deflationary token. There is no algorithm for new BNB mining. Validators and supply regularly dwindle based on Binance’s scheduled BNB burns. BNB is a utility token with many uses, validators and grantors will continue to enjoy the other benefits of holding BNB.
According to Binance, the gas fee is collected in each block and split into two system smart contracts:
- System Award Agreement: This contract can hold up to 100 BNB. 1/16 of the gas fee will be credited to the system’s reward contract if it has less than 100 BNB. Funding under the reward contract is used as cross-chain package subsidies.
- ValidatorSet Agreement: The rest of the gas fee is transferred to this contract. Storing gas fees is safe for both validators and authorizers. The funds in the contract will be transferred to Binance Chain and distributed to the authorizers and validators according to their stake every day.
Then we look at management
The BurnRatio change will be determined by the BSC validator through the voting proposal based voting process (share BNB). This will be done on Binance Chain and any community member can suggest changes to the parameters. A minimum deposit of 2,000 BNB is required for an offer to be considered by validators. This allows validators to vote on proposals; All BNB will be refunded after the proposal is voted on. BSC validators can vote “for” or “against” based on their voting power.
Since there are no mining rewards in the BSC network as with the Bitcoin and Ethereum Blockchains, gas fees are redistributed among validators. In the BSC network, gas fees are collected from each block verified on the network and then distributed between the two smart contracts.
If the network agrees to distribute the update, the manageable “burnRatio” parameter will be included in the network. At the end of each block, the validator will be able to call the deposit function, which will then initiate the write mechanism. Coin burning will be achieved by transferring the fee to the specified burning address.
With the introduction of this new BSC write mechanism, BNB burning is expected to increase significantly, which will positively affect the BNB price. cryptocoin.com As we mentioned earlier, due to the deflationary effect, Ethereum price increased significantly in addition to the overall positive market structure.
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