Binance has announced plans to burn a significant amount of Binance-pegged tokens on various chains, such as BSC, MATIC, BNB, BPSC, and TRX. The burn will release the equivalent amount of native tokens that served as collateral and will aim to boost the token economics of the pegged tokens.
Binance-pegged tokens are backed by the native tokens of the corresponding crypto assets, which are held in reserve by Binance. These tokens allow users to access the benefits of the different blockchains, such as faster transactions, lower fees, and more liquidity while maintaining exposure to the original crypto assets.
Binance regularly conducts token burns, which destroy a certain amount of tokens, reducing the total supply, and increasing the scarcity and value of the remaining tokens. The exchange platform performs token burns for its own native token, BNB, as well as for its Binance-pegged tokens. Binance’s token burns are usually based on the trading volume and the market conditions of the crypto assets.
Binance has recently announced that it is set to initiate a major burn of Binance-pegged tokens on various chains, scheduled for Monday, January 22. The announcement was made on Binance’s official X account.
According to the announcement, the exchange company will burn a significant amount of Binance-pegged tokens on various chains, such as BSC, MATIC, BNB, BPSC, and TRX. The burn will involve releasing an equivalent amount of native tokens that served as collateral for the pegged tokens. However, the exact amount of burn or the cryptocurrencies to be affected are unknown.
The announcement stated that the burn would aim to boost the token economics of the Binance-pegged tokens by reducing the idle tokens and increasing the demand and value of the active tokens. The announcement also noted that the burn will not affect the users’ balances or the functionality of the Binance-pegged tokens.
This is not the first time that Binance has performed a burn of Binance-pegged tokens. On September 14, 2021, Binance revealed its plan to initiate a major burn of pegged coins, as announced on its official X account. Among the candidates for destruction, four out of the five tokens specified were Binance USD (BUSD) tokens across different blockchains.Â
The exchange’s initiative involved burning the pegged tokens on the native blockchains and subsequently releasing the equivalent number of tokens initially used as collateral.
The tokens in the lineup for the September burn included TUSDOLD on the BSC chain and BUSD across MATIC, BNB, BPSC, and TRX chains.
The token burn was initiated just after the crypto exchange announced that it would end support for BUSD in 2024, owing to regulatory challenges from the U.S. Securities and Exchange Commission (SEC).
The SEC has been cracking down on crypto platforms and products deemed to be securities or violate the securities laws. Binance has been facing regulatory scrutiny and pressure from various authorities around the world, such as the U.K., Japan, Canada, and Singapore.