Over the past two months, an average of more than 30 million BUSD (Binance USD) tokens have been burned per day, indicating a major shift in the crypto market.
This trend has caught the attention of experts and investors as the BUSD token burn plays a vital role in reshaping the BTC 0.36%-and-digital-currency-testing-nears-completion/">digital currency landscape.
According to data collated by leading blockchain monitoring platform Arkham, more than $2.4 billion in BUSD has been transferred to BUSD burn addresses on Paxos since April 1.
Of particular note is that nearly 70% of these came from a single deposit address. The research further revealed that 89.4% of the total burnt volume can be attributed to two deposit addresses.
The largest recipient address, labeled 0x72b, exclusively receives funds from Binance International addresses, while the second largest recipient address, 0x4F4, only receives funds from Binance US addresses. This apparent segregation demonstrates the existence of a clear line between international and domestic BUSD holders.
Cumulative burns since April 1 show a staggering 31.8% reduction in BUSD’s circulating supply over the past two months.
On the Ethereumblockchain alone, there are approximately 5.15 billion BUSD tokens left, most of which are held by Binance, with 4.99 billion BUSD stored directly in Binance wallets. The remaining BUSD tokens not held by Binance are scattered across the BNB Chain ecosystem.
Binance holds less than 20% of the $1.55 billion worth of BUSD on the BNB chain, while the remaining $1.25 billion is actively traded on-chain.
The burn rate of BUSD over the past two months has been staggering, averaging over $30 million worth of tokens per day. Extrapolating at this rate, BUSD is expected to be fully depleted in less than five months in late November 2023. However, it is important to note that the burn rate is unlikely to remain linear in the future, as various factors will affect the rate at which tokens are burned.
The burning of BUSD tokens has attracted attention due to its potential impact on the entire crypto market. As the supply of BUSD decreases, it may lead to increased scarcity and may drive up the value of the remaining tokens.
Additionally, this trend may spark renewed interest in token burning mechanisms, with other cryptocurrencies considering similar strategies to regulate supply and spur growth.
Experts believe that the burning of BUSD tokens reflects a broader shift in investor sentiment and a growing understanding of the value token burning can bring to the market.
While the exact motivation behind the massive BUSD burn is unclear, it is clear that market participants are embracing this mechanism as a means of optimizing the token economy.