Correction: Binance no longer claims to burn 20% of its quarterly profits. It removed this claim from its whitepaper in March 2019. So, while the token burn details are accurate, it is unknown how much profit Binance made in the last quarter.
Each quarter, the exchange claims to burn around twenty percent of its quarterly profits in the form of its native cryptocurrency, BNB. The latest burn for Q4 removed $38 million worth, a roughly $6 million increase from last quarter’s takings. By comparison, $37.6 million was burned in the third quarter of 2019, suggesting profits for that quarter amounted to $188 million.
That's a 3.19 percent increase,
Burn, baby, burn
The burn is a sign that Binance, which last year rolled out a high-risk margin platform, is chipping away at the dominance of exchanges that offer similar services, such as BitMEX, said Ryan Selkis, the CEO of crypto analytics firm Messari. Which makes it unlikely the burn is mere fanfare, he added: "It’s tough to envision a scenario where Binance is intentionally setting their own money on fire.”
Binance also acknowledged the obvious—that markets in the most recent quarter had been “rife with ups and downs.” It nonetheless claimed that the BNB token itself had “decoupled” from Binance’s centralized operations and had “drastically increased in utility.” The increase, it said, aligns with the recent rollout of various decentralized platforms, including a proprietary blockchain—“Binance Chain”—and an “decentralized” exchange, Binance DEX, operated at arm’s length.
In BNB terms, this quarter’s burn removed 2.2 million BNB from circulation; a 200,000 increase over the previous quarter and a 1 million increase over the quarter before that.
Feeling the burn
Binance has seen remarkable growth since its launch in 2017, with a host of acquisitions, product launches and coin listings, among them the wildly popular Bitcoin Futures and Bitcoin Margin services, giving it pride of place among the nascent crypto exchanges.
Binance has said that it will continue to burn its BNB supply until there are a mere 100 million BNB left; that’s about half of the BNB money supply that was issued. Roughly 183.3 million tokens remain outstanding.
The exchange generates BNB in a variety of ways, and said in today’s statement that the latest burn “represents activity across Binance spot, margin, and futures exchanges, as well as the various solutions, divisions, and partners that use BNB.”
Last year Asian exchange Huobi, a competitor to Binance, saw a similar increase in profits.