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1) The new BNB burn formula is interesting:

The 19th Quarterly BNB Burn Completed via BNB Auto-Burn | Binance Support

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2) The amount of BNB burned each quarter is: (1000 * number of BSC blocks) / (BNB price + 1000) There are about 2.5m BSC blocks per quarter, and this doesn't really depend on anything, so the formula is really: # BNB tokens = 2.5b / (price + 1000) What does that mean?

SBF

@SBF_FTX

Apr 19

3) Well, this is quarterly, so annually it's: 10b / (price + 1000) There are about 170m BNB tokens. Also, the burning stops when there are 100m tokens left.

SBF

@SBF_FTX

4) So, in the limit where BNB price is small, 10m tokens are burned each year for the next 7 years, and then the burning stops. (Note it isn't clear there's *buying* -- the burn may come from treasury/etc.) Which doesn't really have much to do with Binance, or BSC.

8:39 PM · Apr 19, 2022Twitter Web App

Replying to

5) In the limit where BNB price is >> 1000, $10b worth are burned each year, until there are 100m tokens left. Again, this limit doesn't really have to do much with Binance, or BSC.

SBF

@SBF_FTX

Apr 19

6) And the thing that determines which of these limits it's closer to is... the price of BNB. If you ignored the 100m cap, then BNB would start burning 10m tokens/year, and ultimately--if the token supply starting running out or price went up otherwise--end up burning $10b/year.

SBF

@SBF_FTX

Apr 19

7) At that limit, I guess BNB would be worth $200b or something. At the lower limit, it would be worth... well, it's unclear, because you can't burn 10m tokens every year forever, or you'll run out of tokens. If you stop burning at 100m, tWhen it just reduces total supply.

SBF

@SBF_FTX

Apr 19

8) So if BNB's price goes up, then it's worth $200b except for the 100m cap; if BNB's price goes down, then it reduces to 100m supply over ~7-10 years. Which is... interesting? It's a cool mechanism. But it's not clear it's related at all to Binance.

SBF

@SBF_FTX

Apr 19

9) Burn doesn't drive price; price drives burn. Anyway, BNB is worth about $400, so the formula says to burn around 1.8m BNB tokens this quarter (~$700m), which is roughly what they did.

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The 19th Quarterly BNB Burn Completed via BNB Auto-Burn | Binance Support