Recent hack prompts Binance to burn tokens

Binance decides to burn BNB tokens after recent hack

Image source: Coin Gape

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

BNB burn

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

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

It is generally used as a measure of inflation.

Binance Burn withdrew 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 the BNB chain bridge and obtained 2,000,000 BNB with artificial withdrawal proofs.

The stolen BNB at the time 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 more than $ 100 million in cash to other chains.

After the hack

Despite the hack, no user lost any funds during the heist, which led to a rule prohibiting the minting of new coins for BNB, intended as a deflationary token.

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

This has also been done with an on-chain feature that burns 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.

However, since then, Binance has switched 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.

In general, 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 is also helping to burn Luna Classic Tokens (LUNC) using the same approach as the latest quarterly burning model.

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

Binance periodic burns will 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

Opinions expressed by Miami Wire contributors are their own.

LATEST POSTS