Binance just released a new proposal for a Binance enhancement protocol called the Binance Evolution Protocol (BEP-95). Accordingly, it is a real-time fee-burning mechanism, as it is used today in the Ethereum blockchain. Its main goal is to make BNB more valuable and speed up the coin burn process.
What is the Binance Evolution Protocol (BEP-95)?
The idea of BEP-95 is to speed up the burning of BNB and help BSC become more decentralized as part of the gas fee is burned. The burning of BEP-95 depends only on the activity in the BSC network and will continue to work even after the planned BNB burn of Binance has been completed (reduction of the BNB supply), thereby reaching the target supply of 100 million BNB in circulation.
The BEP is currently still in the elaboration phase. The proposal includes two mechanisms that will affect the network: the burning of fixed fees currently being distributed to auditors and a manageable burn ratio.
Why does BSC need BEP-95?
BSC can speed up the combustion of BNB and improve its intrinsic value by burning part of the gas charge. Before that, the price of Ethereum rose significantly due to the deflationary effect.
While the implementation of BEP can reduce the total amount of BNB validators and delegators from staking, the value of the token can increase over time. This combustion mechanism will further reduce the supply of BNB. As a result, the growing demand will result in a higher BNB value.
Specification of the Binance Evolution Protocol
According to the white paper, BNB is a deflationary token. There is no algorithm for mining new BNB. Validators and offer decrease regularly in accordance with Binance’s planned BNB incinerations. BNB is a utility token with many uses, validators and delegators will enjoy other benefits from holding BNB.
The gas fees are collected in blocks and divided into two system smart contracts:
- System premium contract: This contract can contain up to 100 BNB. 1/16 of the gas fee is carried over to the system’s reward contract if it has less than 100 BNB. The capital in this contract will be used as a package grant in the chain.
- ValidatorSet contract: The rest of the gas fee will be transferred to this contract. This is a gas charge storage vault for both validators and delegators. The funds in the contract are transferred to Binance Chain and distributed daily to the authorizers and validators according to their use.
BNB owners decide on the redistribution of gas premiums in the network. However, since the circulating supply could drop significantly, many expect the price of BNB to rise in the short term once this proposal goes live.
The BurnRatio change is determined by the BSC validator through its voting process based on voting proposals (Stake BNB).
This process is carried out on Binance Chain and every community member can suggest changes to the parameters. In order for a proposal to be considered by the validators, it must receive a minimum deposit of 2,000 BNB. This allows validators to vote for suggestions; all NBB will be returned after the proposal has been voted on. BSC validators can vote “for” or “against” depending on their voting strength.
Since there is no mining reward within the BSC network, as is the case with Bitcoin and Ethereum, the gas fees are redistributed among the validators. In the BSC network, gas fees are charged from each block, which is validated in the network and then distributed to two smart contracts. If the network agrees to provide the update, the manageable burn ratio parameter is added to the network.
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