Binance exchange regularly burns some of its own coin, BNB. Since these destroyed coins reduce the amount of supply, they are effective in making the price move upwards.
Burning transactions according to the 3-month trading volume of the Binance exchange until now have been completely changed.
In a blog post published by Binance, it was stated that the management of the exchange has decided to implement a new automatic burning procedure for Binance Coin.
As quoted by Colin Wu, a Chinese crypto correspondent, BNB automatic coin burning will depend on the price of Binance Coin and the level of activity on the Binance Smart Chain, unlike in the past, so it will not be based on Binance’s profit.
Breaking：Binance announced that the BNB quarterly burn will be replaced with BNB Auto-Burn. BNB Auto-Burn will be halted when the total circulation of BNB drops below 100 million. https://t.co/oR72t2I2mn
— Wu Blockchain (@WuBlockchain) December 23, 2021
The new automatic burning process, which will continue until there is a supply of 100 million BNB, is expected to be a more transparent application compared to the supply-demand balance. Thus, BNB coins will be burned directly based on supply and demand dynamics, not Binance’s profit margin. For example, when the BNB price drops, the number of BNBs burned will automatically increase and sharp price drops will be prevented.
*Tokens sent to an unusable wallet as a result of the burning process are completely irreversibly destroyed. In other words, after the burning process, the circulating supply of the relevant coin decreases. This situation is generally known as a situation that reflects positively on the price.