Binance reaches new highs with its $52 million quarterly burn

Binance, a leading crypto exchange, has announced its quarterly token burn totaling $52.5 million worth of its native BNB token. This surpasses its prior all-time high in Q1 of 2018 at the peak of the last bull-market when trading volumes were also at historic highs. While prior burns served as a proxy for exchange revenue, Binance removed language stating they burnt 20% of their revenue changing it to be vaguely based on exchange volume.

Binance’s growth this quarter was predominantly a result of its future’s exchange growing to be one of the largest by volume as well as additional fiat onramps. Binance also broke the news with its estimated $400 million acquisition of CoinMarketCap and more recently a new smart-contract platform.

Why it matters

• Token burns are often conflated with share buybacks, however, as we’ve written about that analogy has little bearing in the real world. BNB is also different from some of its peers such as LEO which directly buys back tokens on the open-market whereas Binance burns its own treasury. That being said, a key difference is that BNB tokens need to be used to pay fees while LEO just needs to be held to get discounts into perpetuity. This makes it such that traders need to continually buy BNB to receive the discount which then goes to Binance to burn. Over time this acts effectively like an open-market buy since there is constant buying demand which is subsequently burned.
• With its recent spree of acquisitions, new products, and continued growth, Binance is looking to have its services touching every aspect of the crypto world. Viewing them as simply an exchange is short-sighted as they can leverage their massive userbase to become a full-service financial provider.