In a recent blog post, Binance Smart Chain announced the introduction of its new Binance Evolution Protocol, BEP-95. This BEP adds a real-time burning mechanism to the economic model of BSC, which would make BNB’s tokenomics more dynamic. According to the publication, the newly launched BEP is aimed at speeding up the burning of BNB and making BSC more decentralized by burning a portion of the gas fee.
The BEP-95 burn will be based purely on the activities on the BSC network activity, and it will continue to decrease BNB’s supply even after achieving the goal of 100 million BNB in circulation.
Importance of BEP-95
By burning a percentage of gas fees, the BSC network can speed up the BNB burning process and increase its intrinsic value. The BNB holders will decide how the BSC gas incentive will be distributed. Also, during implementation, BEP may reduce the total amount of BNB received by validators and delegators via staking, and the value of their rewards in fiat may increase. This burning process would further restrict BNB supply, causing the BNB value to rise as demand rises.
Distribution of Gas Fees
BNB is a deflationary token by design, so no mining algorithm will allow fresh BNB to be mined and reward validators, and based on Binance’s scheduled burn, the supply will continue to decrease for BNB to have a higher value. However, being a utility token, BNB has a wide range of applications, and delegators and validators will continue to benefit from their BNB holdings.
There are two major system smart contracts in which the gas fee is collected and divided:
System Reward Contract: The contract can only have a maximum of 100 BNB. If the system reward contract has less than 100 BNB, 1/16 of the gas fee will be sent to it. The reward contract’s funds are used as cross-chain package subsidies.
ValidatorSet Contract: The remainder of the gas fee goes to the ValidatorSet contract. It is the vault where validators and delegators keep their gas fees. Every day, the contract’s funding will be moved to Binance Chain and divided into delegators and validators based on their shares.
A look at the Governance
Binance has stated that the method for changing the burn ratio will be selected by BSC Validators based on their voting power through a democratic proposal and vote system (staked BNB).
According to the publication,” This process will be carried out on Binance Chain, and every community member can propose a change of the parameters. In order for the proposal to be reviewed by the validators, it has to receive a minimum deposit of 2,000 BNB (mainnet). This will allow the validators to vote on the proposal; all BNB is returned after the proposal has been voted on. The BSC validators can vote “for” or “against” based on their voting power.”
Community members can get more details on all of Binance’s social media platforms.