- With a market cap of $6.63 billion, BNB Chain was the third-largest repository for stablecoins.
- The market cap has shrunk considerably, nearly 27%, since February.
Binance announced a major token burn event which was set to alter the stablecoin supply on the BNB Chain [BNB].
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In a tweet dated 17 May, the crypto behemoth said that it will remove a sizeable portion of Binance-pegged USDT, USDC, and BUSD tokens from the BNB Chain.
Binance added that an equivalent amount of these tokens will be released on their respective native networks.
The strategic move could drive the scarcity and subsequent demand for stablecoins which already boast of a market capitalization of more than $130 billion, as per CoinMarketCap.
Today #Binance will burn a significant amount of Binance-pegged USDT and USDC tokens on BNB Chain.
The equivalent amount of these tokens on their native networks, which were used as collateral, will then be released.
— Binance (@binance) May 17, 2023
Binance’s stablecoin ecosystem
In recent years, stablecoins developed into a crucial part of the digital asset industry, serving as the main channel through which fiat currency enters and leaves the market.
Most stablecoins are natively issued on Ethereum [ETH], using the ERC-20 standard, which limits their usage on other chains.
Binance offers a wrapped version of these stablecoins. This helps in transporting coins to other chains for the sake of increasing interoperability.
Moreover, with a market cap of $6.63 billion, BNB Chain was the third-largest repository for stablecoins, according to data from DeFiLlama.
USDT took up the majority of the supply on the chain, approximately $3.38 billion at the time of publication.
Source: DeFiLlama
However, as evident, the market cap has shrunk considerably, nearly 27%, since February.
This followed after BUSD issuer Paxos halted the issuance of the stablecoin. It led to a flurry of BUSD redemptions for other assets. The graph below sums up the reducing dominance of BUSD on BNB Chain
Source: DeFiLlama
Checking BNB’s status
The news of the burn event had a positive impact on the price of exchange token, BNB, as it soaked gains of 1.24% in the 24-hour period, data from CoinMarketCap revealed.
How much are 1,10,100 BNBs worth today?
The supply held by top addresses increased noticeably over the last week, per data from Santiment. A plausible rationale behind this could be the positive MVRV Ratio. It can prompt investors to accumulate more BNB in pursuit of further gains.
However, the daily active addresses declined sharply since the highs established in the first week of May
Source: Santiment
