How does the BNB token burn work?
The BNB token burn is a process that Binance uses to reduce the total supply of BNB tokens in circulation.
This process is designed to increase the value of the remaining tokens, as it reduces the amount of tokens available for purchase. The BNB token burn works by taking a portion of the profits from each quarter and using them to buy back and destroy BNB tokens. This process is done on a quarterly basis, with 20% of all profits being used for this purpose.
The amount of tokens bought back and destroyed is determined by the total number of tokens in circulation at the time. This process helps to increase the value of BNB tokens, as it reduces the total supply available for purchase. This means that as demand increases, there will be fewer tokens available for purchase, which will drive up prices.
Additionally, since these profits are taken from each quarter, it helps to ensure that there is a steady supply of funds available for this purpose. Overall, the BNB token burn is an effective way for Binance to reduce its total supply and increase its value over time. By reducing the number of tokens in circulation, it helps to ensure that demand remains high and prices remain stable.
