Binance Smart Chain May Clone Ethereum ( $2,048.30 ) ’s EIP-1559 Update

Key Takeaways

Binance Smart Chain developers have proposed a new fee burning update called BEP-95.
If implemented, the update will burn a portion of the transaction fees paid in BNB ( $227.35 ) ( $227.35 ) ( $227.35 ) for all transactions on the blockchain.
The proposal shares similarities with Ethereum ( $2,048.30 ) ’s EIP-1559 update.

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Binance Smart Chain is looking to replicate Ethereum ( $2,048.30 ) ’s gas fee burning mechanism. If introduced, the BEP-90 gas fee proposal will add more deflationary pressure on BNB ( $227.35 ) , in addition to the token burns that already run quarterly.

New Proposal Suggests Burning BNB ( $227.35 )

Binance Smart Chain may introduce a similar update to Ethereum ( $2,048.30 ) ’s EIP-1559 fee burn proposal.

Today, the core development team behind Binance Smart Chain proposed a change to the network’s gas fee  under the name BEP-95.

“The abstract behind this BEP is to speed up the burning process of BNB ( $227.35 ) ,” a blog post announcing the proposal read.

According to the announcement, every block on the network will burn a set ratio of the gas fee rewarded to validators. The team has suggested that 10% of the fees should be burned, though the burn ratio would be adjustable through governance.

Binance already burns significant portions of the BNB ( $227.35 ) ( $227.35 ) ( $227.35 ) supply quarterly. BEP-95 would add further deflationary pressure on the token.

While BEP-95 would reduce the amount of BNB ( $227.35 ) ( $227.35 ) ( $227.35 ) validators and delegates receive, the fiat value of the rewards “may increase,” the announcement noted. Validators and delegates will vote on the proposal.

Binance Smart Chain is a centralized fork of Ethereum ( $2,048.30 ) . Binance launched the platform in September 2020, and the project’s developers have since replicated many of Ethereum ( $2,048.30 ) ’s core features.

Ethereum ( $2,048.30 ) ( $2,048.30 ) introduced a fee burning proposal called EIP-1559 through its London hardfork in August. EIP-1559 burns a portion of the gas fee, paid in ETH, with every transaction on Ethereum ( $2,048.30 ) . The feature was partly introduced to make gas fees more predictable. To date, EIP-1559 has burned close to 600,000 ETH.

EIP-1559 also added deflationary pressure on the ETH token supply. As network activity has grown, EIP-1559 has been a major catalyst for ETH’s price run over the last few months.

With a similar gas fee burn in place, Binance Smart Chain’s BNB ( $227.35 ) ( $227.35 ) ( $227.35 ) token could experience a similar rise. Binance Smart Chain is currently the second-largest smart contract platform behind Ethereum ( $2,048.30 ) , with about $20 billion in total value locked.

To attract new activity to the network, Binance recently announced a $1 billion fund to support new projects, which may have also helped BNB ( $227.35 ) ( $227.35 ) ( $227.35 ) rally. The token is up more than 40% in the last 30 days, trading at around $500 according to CoinGecko.

Notably, Binance Smart Chain is not the only blockchain to propose a token burn that shares similarities with EIP-1559. The Ethereum ( $2,048.30 ) ( $2,048.30 ) ( $2,048.30 ) sidechains Polygon and xDAI are also planning to launch their own versions of the Ethereum ( $2,048.30 ) ( $2,048.30 ) ( $2,048.30 ) update. Terra, meanwhile, has just announced that it will burn 10% of its token supply next week.

Disclosure: At the time of writing, the author of this feature owned ETH.

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