Image source: Coin Gape

Recently, Binance completed its 21st quarter by burning BNB tokens to recoup losses from last week’s Binance bridge hack.

BNB burn

BNB is the native cryptocurrency of BNB Chain (formerly called Binance Smart Chain), which competes with Ethereum.

Burning occurs when tokens are permanently removed from the cryptocurrency’s inventory.

It is generally used as a measure against inflation.

Binance Burn burned exactly 2,064,152.42 BNB from the market.

The tokens were worth over $549 million at current prices.

The hack

Last week, a hacker took advantage of BNB’s chain bridge and obtained 2,000,000 BNB with artificial withdrawal proofs.

At the time, the stolen BNB had a net worth of approximately $566 million.

After the theft, most of the coins were lost when BSC chain validators froze the network.

Since then, the network has had a hard fork to repair some of the damage.

A hard fork is a patch release described as “temporary” to enable cross-chain functionality between BNB Beacon Chain and Binance Smart Chain.

However, the hacker managed to transfer over $100 million in cash to other channels.

After the hack

Despite the hack, no Binance user lost money during the heist.

Instead, it led to a rule banning the minting of new coins for BNB, intended as a deflationary token.

The action was accomplished through Binance’s quarterly BNB purchases.

This was also done with an on-chain feature that burns out some of the BNB transaction fees in real-time.

Quarterly burns

Previously, the quarterly burns were based on Binance’s profits from BNB’s operations on its exchange platform.

However, Binance has since moved to a formal “auto-burn” model.

The formula calculates the amount of BNB to burn based on the number of blocks of BNB chains available during the quarter, along with the price of BNB.

Generally, the higher the price of the coin at that time, the more BNBs will be burned each quarter.

The company’s fire in July burned 1.96 million tokens, for a total of $444.6 million that month.

Other notes

Binance also helps burn Luna Classic Tokens (LUNCs) using the same approach as the latest quarterly burning model.

LUNC transactions charge a fee to burn the token on the market.

Binance’s periodic burning will only stop once the BNB supply reaches less than 100,000,000 tokens, which is less than 50% of the token supply since the initial launch.

Reference:

Binance burns as many BNB tokens as hacker minted from thin air