Binance Burns $500M BNB Despite $100M Bridge Hack
Per its BNB Auto-Burn procedure, Binance burns 2,065,152.42 of BNB worth roughly $574 million, despite losing out to a recent $570 million hack.
This latest burn takes the total BNB destroyed to 38,996,924.79, approximately $10,092,316,766.94 at BNB’s current price. BNB is the fifth-largest cryptocurrency by market capitalization.
Binance burns BNB to curb its circulation
The burn marks the exchange’s latest efforts to reduce the circulating supply of BNB to 100,000,000.
It continues a trend started by the exchange in 2017 to use 20% of its profits to rebuy BNB in its treasury for quarterly burning. In 2021, it switched to a more objective auto-burn formula-based mechanism independent of Binance’s revenues generated using BNB. The number of tokens burned now depends on the token’s price and other secondary factors like supply and demand and supply and the number of transaction blocks generated in a quarter. BNB is a native token that powers transactions on the BNB Smart Chain and is used in the chain’s governance.
Of the tokens burned, 4,833.25 (about $1M) BNB were burned through Binance’s Pioneer Burn Program. Binance announced this remedial mechanism in Sep. 2020 to help qualifying customers that may have lost BNB by sending them their lost tokens and burning the same amount in the next quarterly token burn.
Binance burn impressive following BNB Chain exploit
The latest token burn is all the more impressive considering that, less than a week ago, a cross-chain bridge BSC linking the BNB Smart Chain and the BNB Beacon Chain was exploited, resulting in the theft of 200 million BNB (roughly $570 million). A cross-chain bridge is a software construct that allows cryptocurrency transfer from one blockchain to another.
Apparently, hackers exploited a bug in the BSC Token Hub bridge’s smart contract code that allowed them to forge transactions and move funds into their wallets.
In an interview with CNBC, Binance CEO Chanpeng “CZ” Zhao said that, by contacting the core BNB development team, the exchange was to pause the blockchain and limit damages to under $100 million and even managed to freeze $ 7 million using its security partners. About $400 million remains unaccounted for, with the hackers unable to move them off the BNB Smart Chain. On-chain governance methods will be used to decide whether the stolen funds will be frozen or the remaining funds will be “covered” using the BNB auto-burn mechanism, the BNB Smart Chain community said in a blog post.
In response to the burn, Crypto/Forex trader Crypto Prince lauded Binance:
Another Twitter user, reaper, expressed similar sentiments:
CZ called on his followers to send burn memes shortly before the burn began:
The transaction ID for the 21st quarterly burn is: https://explorer.bnbchain.org/tx/5C6C88892AB98D820173DF6F784F76DDABCA32A06546C132514E663E66699794.
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