On Monday, October 18, 2021, Binance conducted its 17th quarterly token burn for their exchange token, BNB. This time, ~1.4M BNB tokens (approximately $640 million) were burned. The act of burning is not distinct to Binance and is a popular mechanism to reward token holders, the most high-profile example being Ethereum's EIP-1559 upgrade in which a portion of every transaction is burned. Burning is the permanent removal of a token from circulation, thereby reducing its supply. 

Binance has previously stated that it commits to burning 100 million BNB. So far, the company has burned ~16.70% of the BNB supply to date. However, there is more than meets the eye when it comes to BNB token burns.

Source: Delphi Digital

It is important to note that the formula for Binance's token burns are not consistent nor publicly disclosed, as is the case for other exchange token burns like the FTX and Huobi tokens. Highlighting BNB’s centralization risks was the discovery in January 2020 that Binance discreetly edited the original wording in the BNB whitepaper to remove the “20%” burn benchmark without publicly disclosing the change. Binance made the publicly unannounced edits back in March 2019. The new wording states "Every quarter, we will destroy BNB based on the trading volume on our crypto-to-crypto platform until we destroy 50% of all the BNB." 

Many investors shrugged at this change as, ultimately, the same amount of BNB will be burned, but then again, that, too, is at Binance’s discretion. The lack of transparency surrounding the changes to the monetary policy highlight the trusted nature in an exchange token and should serve as a red flag for future investors.

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