Binance is “prepared” to launch a new feature on its smart chain, introducing new innovations to the network. Binance will launch a fee-burning mechanism on the Binance Smart Chain (BSC) which will allow real-time fee burning, similar to the mechanism that exists on the Ethereum network. The BEP-95 update is intended to accelerate the burning of BNB and increase the token’s value as quickly as possible by improving decentralization..
BEP-95 will have two features; a governable burn ratio and a mechanism to burn validators’ fixed network fee. These will impact the network positively by increasing the burn speed and improving decentralization. Both are favorable factors for furthering the token’s value. As it was with Ethereum, which increased in its natural value after it received a similar update, the BSC network is expected to gain a positive price structure and appreciate in value.
Binance had its largest burn ever in July 2020 and according to Binance, BSC tokens will be burned every quarter until half of the total supply is left. Binance regained its $50 billion market cap in July 2021 after burning 1.3 million tokens. An increase in the on-chain burn is thus expected to increase its market cap and value. A reward pool will also be generated for distribution according to governance agreements later.
Since the BSC network does not operate a mining protocol, rewards are derived from transaction fees at the end of each block. These rewards are distributed to the smart contracts involved, according to an algorithm. A potential issue is the fixed amount of transaction fees to be distributed but Binance has announced that the users will determine that.
Binance has announced that the launch of BEP-95 is subject to a vote and possible passage. If the delegators agree to it, the update will be launched and a burn mechanism will be added to the network. The mechanism works simply; after each network validation, a deposit feature is activated by the validators. This feature then transfers a pre-agreed amount from the network fee to a burn address. Binance also plans to keep the feature long after it achieves the initial burn target of 50% of the total BNB supply.
BNB Price Movement
As one of the biggest networks and ecosystem, Binance has built its native token, BNB into a giant in the industry. With a market capitalization of over $80 million, the token is powerful in its right. The BSC network has grown to become a great choice for DeFi projects due to its low fees and fast transaction speed.
Following the general crypto meltdown in May, BNB traded below $450 until August 20 when it broke the resistance. BNB currently trades at around $487 and is looking to break further resistance zones. The token has formed a bearish candle in a retracement move. Some traders believe that the proposed BEP-95 update, together with bitcoin’s predicted bullish trend going into the year’s end, will boost BNB’s price beyond the all-time high.
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