Tag: burn

Binance Completes 21st Quarterly BNB Burn With $548M BNB Destroyed

Following its quarterly burn, the Binance (BNB) Chain has successfully eliminated $548 million worth of BNB, a move that has left the market relatively unaffected.

Crypto exchange platform Binance in its latest news, announced it had successfully destroyed approximately 2,065,152.42 BNB. 

The exchange platform also stated that an added 4,833.25 BNB was part of the burn through its Pioneer Burn Program – a burning program that favors those who genuinely lost their digital assets.

Binance takes responsibility for these losses in the Pioneer Burn Program by deducting tokens (lost by users through honest mistakes) in the quarterly burn and then refunding the users depending on some specific conditions.

Binance launched the BNB coin in 2017, and ever since, the exchange platform has been committed to burning a large amount of BNB coin every quarter. Initially, Binance started the BNB burn mechanism by buying back BNB coins with 20% of their profit and then destroying it until they bought back and burned 50% of BNB (100MM).

However, in December 2021, the exchange platform introduced a new burning mechanism that relies on automatic on-chain calculations.

This means the BNB auto-burn system weighs the amount of BNB to be burnt automatically based on the price of BNB and the number of blocks produced during the quarter. In spite of the large amount of BNB coins burnt, the market seems rather unaffected by it, with the BNB coin moving downward and still hovering around $260 – at the time of writing.

Speaking of BNB, last week, the BNB blockchain suffered an on-chain hack that occurred on a bridge between blockchains. According to Binance, an estimated $100 million to $110 million of BNB tokens were stolen due to this hack.

wBTC Supply Hits 9-Month Low After Major Burn

The supply of wrapped Bitcoin (wBTC), an Ethereum-based ERC-20 token that mirrors the value of Bitcoin and is pegged 1:1 with its price, has hit its lowest point since May 2021. This follows a significant burn of 11,500 wBTC linked to the now-bankrupt crypto lender Celsius, which has turned its growth rate negative. The current total supply of wBTC stands at 164,396, with a monthly growth rate of -7.39%.

wBTC was co-developed in 2019 by Bitgo, blockchain interoperability protocol Ren, and multichain liquidity platform Kyber. It is managed by the decentralized autonomous organization wBTC DAO, which comprises over 30 members. When merchants want to exchange BTC for wBTC, they start a burn transaction and alert the custodians. The merchant transfers real BTC to a custodian address on the Bitcoin blockchain, which is locked. Once it receives the real BTC, the custodian address mints the equivalent amount in wBTC on Ethereum. Being an ERC-20 token makes the transfer of wBTC faster than normal Bitcoin, but the key advantage of wBTC is its integration into the world of Ethereum wallets, decentralized applications, and smart contracts.

During the peak of the bull run, wrapped tokens became a popular tool of use in the decentralized finance (DeFi) ecosystem. The supply of wBTC peaked at 285,000 in April 2022, when the price of BTC was trading above $48,000. However, with the advent of the bear market and numerous crypto contagions, the demand for wBTC started to fade away.

The first signs of lowering demand came after the Terra collapse, which forced several crypto lenders to redeem their wBTC. According to one report, Celsius Network redeemed about 9,000 wBTC amid a growing withdrawal demand. A similar scenario occurred in November 2022 after the FTX collapse, where reports indicate the now-bankrupt crypto exchange tried redeeming 3,000 wBTC just before filing for bankruptcy. After the FTX collapse in November, wBTC experienced its largest monthly coin redemption, with over 28,000 wBTC redeemed back to the original coin.

The market contagion caused by the FTX collapse also depegged wBTC from the original value of BTC. Although the slippage was just about 1.5%, it raised serious concerns about whether such synthetic tokens were a viable mode of value transfer.

The recent burn of 11,500 wBTC linked to Celsius is significant, as it is the second-largest single-day burn of wBTC. This burn has turned the growth rate of wBTC negative, meaning its supply is decreasing. The total supply of wBTC has now hit a nine-month low.

Despite this, wBTC remains an important player in the DeFi ecosystem, offering a bridge between the Bitcoin and Ethereum networks. Its integration into the world of Ethereum wallets, decentralized applications, and smart contracts provides an added advantage to its users.

Exit mobile version