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CRYPTO STORY OF THE DAY
Binance Has Released A V1.2 Whitepaper Which Has Changed The Metrics That Informs Their Decision On Their Quarterly Binance Coin (BNB) Burn - The Announcement Was Made In A Questionably Covert Manner And Reduces Transparency
BNB was released alongside the Binance Exchange launch in June / July 2017. Among a slew of characteristics (click here for an overview) is a pledge to repurchase / 'burn' 20% of outstanding BNB until 50% of the initially offered coins (or 100M) are left in circulation. In the original V1.1 whitepaper (page 9 in both whitepapers) the exchange had specified that quarterly 'burns' would be equal to 20% of Binance exchange profits which allowed observers to reverse engineer a quarterly profit figure for the firm. In the new white paper, the 'burn' mechanism is now loosely based on volume, while still stipulating the intention to buyback 50% of the coin 'eventually.'
Crypto Takeaway: Our best guess is that there are a couple of possible explanations for why Binance made this decision.
First, given the successful launch of new products, such as futures, 20% of profits would have begun to imply a faster 'burn' rate than the company had intended.
Second, that given scrutiny from regulators, competitors and otherwise the company, being private and not having the obligation, fell out of love with the idea that just anyone could figure out their profit number.
What we don't appreciate about the change is how under the radar the announcement was made. It was done so quietly that several in the crypto-focused media space issued corrections to recent publications because they were unaware of the change. In being the largest crypto trading venue, Binance has plenty to gain from the ecosystem growing and shady operations like this do not help confidence in the nascent space. The episode also highlights the limitations of ICO ownership versus equity, a topic we intend to revisit in the coming days.