Thread by @BSCNews

In October 2021, @BNBCHAIN introduced a new mechanism called the #Binance Evolution Protocol—BEP-95.

The BEP-95 mechanism burns $BNB token, aiming to add more value and make its tokenomics more dynamic. The question is, how does it work? (1/9)

@BNBCHAIN BEP-95 burns transaction fees on #BNBChain. The system collects the gas fees and directs them to two different smart contracts: The “System Reward Contract” and the “ValidatorSet Contract.” (2/9)

@BNBCHAIN The System Reward Contract holds a maximum of 100 BNB. 1/16 of gas fees are transferred to this contract until the #BNB holding reaches the maximum amount. System Reward Contract funds are used for “cross-chain package subsidies.” (3/9)

@BNBCHAIN All other gas fees are in the ValidatorSet Contract, which shares it with validators on #BNBChain.

Now that we understand both smart contracts, how is the burning process carried out? (4/9)

@BNBCHAIN BEP-95 burning mechanism functions with the burnRatio variable set in the ValidatorSet contract.

After every block completion, a validator will sign a transaction to initiate the deposit function to transfer the gas fee to the smart contracts. (5/9)

@BNBCHAIN The deposit function contains the burning logic formula: burnRatio * gasFee. This indicates that the sum will be transferred to the burn address. Binance decided to keep the burnRatio at 10%.

This means that 10% of gas fees will be burnt. (6/9)

@BNBCHAIN Validators on @BNBCHAIN can vote to change the burnRatio percentage based on their amount of staked BNB.

Every community member can create a proposal for Validators to review and vote by depositing a minimum of 2000 $BNB. Users’ #BNB is returned after voting ends. (7/9)

@BNBCHAIN BEP-95 is an interesting mechanism designed to reduce the supply of #BNB tokens and increase their value. The unique feature is also key for more decentralization of the network.

While BEP-95 is a game-changing idea, it also depends on users’ activity on the network. (8/9)

@BNBCHAIN There you have it! A short explanation about #BNBChain’s real-time burning mechanism.

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Don't forget to follow @BSCNews and @Web3Wires for more #crypto and #defi updates. (9/9)