BNB bulls jubilate as Binance Smart Chain switches on automatic burning mechanism

Binance Smart Chain (BSC) has finally turned on its BEP-95 update, which will see the old manual burning process phased out in favor of an autonomous burning mechanism. 

Though there are some similarities between the burning mechanism and Ethereum’s EIP-1559, there are a number of distinctions between the two.

Binance’s BEP-95 is now available

The BSC official Twitter account said earlier this week that the new mechanism has been implemented, with a burn ratio of only 10% at launch.

This mechanism has been in place since October when the Binance team announced that the goal of the new burning technique was to speed up the burning process, which they hope would increase the value of the crypto exchange’s native token by making it more rare.

“This burning mechanism will further restrict BNB supply,” according to Binance, “therefore growing demand would drive the BNB value up.”

The downside of this technique, it was noted, was that validators and delegators would no longer be able to get the same amount of BNB incentives as before, but they may rest assured that the fiat worth of their rewards may increase.

It should be emphasized that this new technique will not replace the tokens’ scheduled manual burning. Both are projected to coexist in the future. Binance’s BSC burns were formerly done manually, as you may recall. The most recent of these burnings led to the destruction of roughly $600 million in BNBs from the network.

EIP-1559 against BEP-95

Binance and Ethereum’s burn pools both use transaction fees to collect assets for their burn pools. However, in the case of Binance, part of these fees are still paid to validators, whereas Ethereum burns them completely.

Another significant distinction between the two is that in the case of Binance, no new coins enter the market, but Ethereum tends to reward miners with additional units of the asset.

 

Image courtesy of Cointelegraph News/YouTube

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