What is Coin Burn?
Coin Burn is the process of reducing total supply by permanently removing coins from circulation. In order to explain how this coin burn process works, we will proceed with BNB Coin example. If you want to learn more about BNB Coin, you can check out our blog.
Binance generates Coin Burn activities at specific time intervals using the coin burning function, a smart contract function. BNB, Coin burning activity is regulated to be performed in each quarter until 100,000,000 BNBs are destroyed, which is equivalent to half of the total amount of BNB (200,000,000 BNB).
The amount of BNB Coin to be traded is determined to be equivalent to the number of transactions in the stock exchange over a period of three months. In short, Binance burns BNB Coins at the end of each quarter, based on total trading volume.
How Does It Work?
The coin holder requests a burning function by transmitting a certain amount of coin burn operation request.
The smart contract then confirms that this user has the coin in his wallet and that the requested coin amount is valid. However, this only applies to positive numbers.
If the person requesting coin combustion does not have enough coins or the specified number is not valid (eg 0 or -5), the burn function is not performable.
If there are enough coins, the coins are reduced from the wallet. The total amount of coins is then updated and the coin burn process is completed.
You should definitely make a clear decision about coin burn. As soon as you start the burn function for coin burning, the coins are permanently destroyed. Once this process has started, there is no option to restore the coins.
To illustrate, the Binance Coin contract contains a function known as the burn function, which is permanently available to everyone. A person requesting a function can permanently subtract the specified number of coins from the amount of coins in circulation. All these coin burning operations are recorded as a process in Blockchain. This shows the transparency and objectivity of the process.
Investment information, comments and recommendations contained herein are not included in the scope of investment advisory. Therefore, making an investment decision based solely on the information and comments contained herein may not produce results that are in line with your expectations.