Binance has completed their third token burn of this year and it has caused a stir in the community, with many questioning the amount and how it is plausible.
The statistic from Binance said that the exchange had burned 2,061,888 $BNB (36,798,103 USD). This shockingly was also almost the same amount as the last two cycles put together.
Token burning is commonplace and Binance have guaranteed they will do it quarterly and regularly. Binance works out how many tokens it burns from the amount of profits taken from each quarter and the trading volume.
20% of its profit being burned would mean that this was a great few months for Binance.
“Since Binance burns 20% of profits, we can deduce that it made approximately $186 million in profit in Q3. This is the second-highest quarterly profit, “ stated the Block’s Larry Cermak
How has Binance made all this money? With its many acquisitions recently it could cause its profits to rise. But this would go against the general trend.
Another question has also arisen, how can Binance burn their second highest amount with a low trading volume for Binance and the industry as a whole in previous months?
Especially as Binance burns on the basis of trading volume. Their white paper states that,“every quarter, we will destroy BNB based on the trading volume on our crypto to crypto platform”.
Yet, as the figure below illustrates, the Q3 trading volume was much lower than that of Q2. So if the basis that the white paper states is to be stuck too, then surely this last burn is way too high.
Thisdid not go unnoticed by Cermak who stated on Twitter:
“Binance’s spot volume dried up in the last few months. The market has been dead and yet Binance just burned the equivalent of the second-best quarter in existence.”
Yet another questionable part of Binance’s token burn is the total they are burning. Their white paper says that they will wipe out 100 million BNB from the 200 million BNB they already have.
Yet, after combining burned addresses and current supply, Binance has a greater amount than the 200 million BNB outlined in the white paper. The addition of 48,461,324 burned +185,474,825 currently owner = a 233,936,149 total.
The hack from earlier this year that saw 7,000 Bitcoins worth about $40 million stolen was bad. The KYC hack in August, which saw its customers personal details leaked, was worse and now this burning scandal could be the cherry on top.
