According to the official Weibo news, the well-known currency has completed the eighth BNB quarterly destruction. This time it destroyed the 800,000 BNB (worth $23.83 million) of the team position. It also said that from the beginning of this destruction, the Binance team will abandon the BNB share held by the team (40% of the total BNB supply) and add it to the BNB quarterly destruction plan until 100 million BNBs are destroyed. When the news came out, the first reaction of the market was that BNB was going to fly. Sure enough, BNB quickly pulled up, rising more than 7% in 30 minutes and hitting $32.5 in the short term. Under consideration, is this really a big deal?
Platform coin 2019 value-added artifact: repurchase destruction
In fact, in 2019, “repurchase and destruction” became the main theme of platform coins, and it seems that platform deflation seems to be the consensus of major exchanges. In April of this year, after the completion of the HT repurchase in the first quarter of 19 years, the fire currency was executed for the first time in the history of destruction, and officially changed from “repurchase airdrop” to “repurchase destruction”. The first destruction of HT was 647.48 million, while the total market at that time was about 330 million, with a circulation of about 257 million. The 20% revenue per share of the Coin Global Station is the same as that of the currency, but 20% of the contract revenue from the second quarter will also be used for repurchase.
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The pace of OKEx is a bit slower. In May of this year, OKEx began to repurchase 300 million OKBs in the market, but OKEx chose to repurchase every week and take 30% of the currency transaction procedures for repurchase. From June, OKEx will also be destroyed every three months, and about 1.93 million OKBs have been destroyed.
Compared with the three giants, the deflation of some small exchanges is very strong. At the beginning of the issuance of platform currency BIKI, BiKi implemented 100% fee income for the system of repurchasing platform coins. It was also the first exchange to adopt this “extreme deflation” model. As of July 1, BiKi has reduced the total supply of platform coins from 1 billion to 656 million, of which the circulation decreased to 393 million, until the total deflation to 100 million. Another network red exchange MXC also successfully transformed, from dividends + destruction to 100% repurchase and destruction of the fee portion.
Deflation, especially the deflation of liquidity, seems to be an essential tool for the appreciation of platform currency. The performance of BNB in 2019 is a good confirmation of the feasibility of this model. From the beginning of the year, the BNB soared to the highest of 40 US dollars. The self-interest of the currency was a major factor, and the continuous advancement of the repurchase and destruction was also indispensable. Before the "model" is in the front, it is not difficult to understand that the exchanges have joined the repurchase and destroyed the army.
Abandoning the BNB share held by the team, is it good or bad?
In the destruction of the platform currency, both the fire currency and the OK insist on repurchase + destruction, which means that the circulation of the platform currency is decreasing. In the case of stable locks, the reduction in liquidity can have a very intuitive effect on the value added of the platform currency. Before this destruction, the currency security was this model.
For Biki, 100% commission repurchase, destroying the circulation + team and foundation lock. Then, only the liquidity repurchase is actually purchased with the handling fee, while the locked position is only destroyed by the coin, and this part of the cost can be retained.
Obviously, the currency has changed from the original fire currency and OK mode to a further Biki mode. At present, the total supply of BNB is 189 million, and 89 million will be destroyed from the final target of 100 million. The team holds 80 million shares, and this part of BNB must be destroyed first. In other words, the BNB's liquidity will not decrease for a long period of time in the future. According to the 800,000 BNB calculations destroyed this time, 100 destructions are required to completely empty the team's 80 million BNBs.
In general, the total amount of BNB has been decreasing, and the total supply remains unchanged. However, although the potential liquidity is decreasing, the market liquidity may have to remain stable for a long period of time and no longer appear to be deflated as in the past. This time, the further growth of BNB's value seems to no longer depend on deflation, but on fundamentals.
Li Lin, the founder of the fire coin, commented on the matter in the WeChat group today:
"(coin security) means that regardless of the circulation, directly destroy the team's hands, that is to say, there is no need to buy back, according to the data directly from the reserved deduction, if this program is considered good, it is great. Reduced hundreds of millions of repurchase costs per quarter."
For many BNB holders, perhaps this is a "bad" news, because the lack of liquidity deflation is a good artifact, and the purchase of BNB into a "value investment." Will this money from the repurchase be included in the bag, can the currency security bring better fundamentals to investors?