FTX’s CEO Sam Bankman-Fried (SBF) posted a thread of tweets where he examined the BNB burning mechanism – shortly after Binance’s cryptocurrency went through its 19th scheduled burn. The 30-year-old CEO concluded that the “burn doesn’t drive price,” but “price drives burn.”
- CryptoPotato reported earlier this week the latest burning of BNB, in which more than $740 worth of the asset was destroyed. Commenting on the event, company CEO CZ said this process makes BNB deflationary.
- SBF dived into the formula that determines the burning and issuance rates of BNB tokens, noting that the yearly issuance of new coins is contingent on the asset’s price. The number of annually burnt tokens will come to approximately 7.142M.
- SBF considered BNB’s price as the vital factor in deciding how the burnt rate will be in the coming years. He wrote:
- If BNB’s price is greater than $1,000, its total market cap should be around 200B; SBF predicted that $10B worth of BNB will be burned each year until there are 100M tokens left.
- SBF saw BNB’s burn rate as constantly adjusted along with its price. If its price goes up beyond $1,000 per coin, 10M tokens will be burnt each year, equivalent to $10B being wiped out of the market.
- However, if BNB’s price goes down, SBF believes the mechanism will reduce the total supply to 100 million tokens within the next 7-10 years. Currently, 170M BNB tokens are in circulation.
- He called BNB’s tokenomics a “cool mechanism” and agreed that the burn rate in this quarter, removing 1.7M BNB out of the supply, is aligned with the formula laid out by Binance.