Binance Smart Chain developers have proposed using a mechanism to burn BNB coins based on network usage. The proposal claims that this would benefit both validators and holders due to the increased value of the token as a result of token burns.
Binance Evolution Protocol 95 (or BEP-95) is a proposal that seems to draw great inspiration from Ethereum’s EIP-1559, which also burns fees and was activated alongside four other EIPs bundled into the London upgrade in August. BEP-95 proposes to burn a portion of the fees that users pay to conduct transactions or engage with smart contracts on the network.
Validators would normally receive these fees as a compensation for safeguarding the network. However, depending on network activity, 10% of these fees would be burned with BEP-95. This proportion is subject to change, and community members can vote to change it. The purpose of this new mechanism, according to the plan, would be to “speed up the BNB burning process and improve its intrinsic value by burning a portion of gas fees.”
This implementation could be a move by Binance Smart Chain developers to help BNB’s sustainability. Binance currently holds regular BNB burns and has only committed to burn 100 million BNB coins. The exchange will stop conducting burns once this number is reached.
Developers hope to keep the currency competitive by modifying the network’s economic policy, which will reduce the quantity of BNB on the market and increase its scarcity. This manoeuvre appears to be strikingly similar to Ethereum’s EIP-1559 proposal, which also included the burning of a portion of the funds that would typically go to miners. This new economic approach likely has contributed to Ethereum’s price increase since it came into effect.
The proposal is still in its early phases and is subject to change before final adoption onto the Binance Smart Chain.