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Binance CEO: Ethereum is For The Rich Guys, But Soon They’ll Be Poor

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Due to the high fees, Ethereum has become a blockchain for the rich guys, according to the CEO of Binance.

This is Binance Smart Chain’s time to shine, and the Binance CEO CZ knows it and is ready to take advantage of it.

The increasing use of DeFi protocols, dApps, and applications built on top of Ethereum has overloaded the network to the point where its fees are almost unsustainable. Several blockchains are vying to emerge as the new Ethereum killer, and CZ is rooting for BSC as the best option.

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Binance vs Ethereum

In a recent tweet, CZ attacked Ethereum, pointing out its Achilles heel: fees. For the man in front of Binance, only the wealthy can afford the fees to trade Ethereum:

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And he is somewhat right. Over the course of 2021, the average transaction cost on Ethereum has catapulted just as fast as the price of ETH (its native token), going from less than $5 on average last year to about $15 today. Just 4 days ago, the network fees reached an ATH of nearly $40 on average, according to ycharts data.

Chart showing the prices of fees on the ethereum blockchain
ETH Fees. Image: yCharts

However, this is the price per transaction. Traders operating on DeFi or yield farming platforms have to deal with the possibility of paying $100+ for each trade they make on a daily basis.

CZ didn’t stop there. A later tweet said he was no longer using Ethereum. Binance is developing two projects to compete directly with the two largest blockchains in the ecosystem.

Binance Chain was designed to enable extremely fast payments with minimum fees. It would be a direct competitor to Bitcoin because of its narrow focus on sending and receiving funds.

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The Binance Smart Chain, on the other hand, allows for the execution of smart contracts more efficiently and cost-effectively than Ethereum.

A Competition to Become The Better Ethereum

The rise of projects such as Polkadot, Binance Smart Chain, and Cardano is a sign of the increasing interest in finding a blockchain capable of replacing Ethereum. Yesterday, Cardano ranked third among cryptocurrencies with the largest market capitalization, dethroning BNB from its recently taken position.

Like Binance Smart Chain, Cardano seeks to execute smart contracts quickly, cheaply, and securely. Still, as a difference, Cardano has a somewhat more complex design and a much longer roadmap.

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However, Ethereum developers are working on the second version of the blockchain. Ethereum 2.0 will have several layer 2 implementations. According to some enthusiasts, the new blockchain will process thousands of transactions per second —even hundreds of thousands once fully deployed, according to Vitalik Buterin.

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Perhaps, once Ethereum 2.0 is complete, it will go back to being a blockchain for the poor guys, and the crypto billionaire CZ will like it again.

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Binance proposes a real-time token burning mechanism to boost BNB value

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  • Binance has proposed the BEP-95 aimed to burn a percentage of transaction fees as a deflationary measure.
  • BEP-95 will occur alongside the quarterly token burn and well after the 100 million token supply is achieved.

Binance Smart Chain (BSC) is taking further steps to incorporate an additional deflationary mechanism to increase token valuation. As announced today, Binance (BNB) is introducing a new Binance Evolution Protocol (BEP) known as BEP-95. The BEP stands out from the network’s occasional token burns since it introduced a real-time burning mechanism.

According to Binance, a fixed portion of gas fees collected by validators in each block will be sent to the burn address. The ratio initially set at 10 percent, is adjustable according to changes proposed by the Binance community. BSC validators get to vote on community proposals, where voting power is based on staked BNB.

For a proposal to be reviewed by the validators, it has to receive a minimum deposit of 2,000 BNB (mainnet). All BNB is returned to holders after the finalization of the voting process. A proposal that wins is that which gathers 50 percent of the total voting power on the mainnet. Binance notes that voted-upon parameters are implemented immediately.

Details of Binance BEP-95 token burning mechanism

BEP-95 became relevant as it speeds up the BNB token burn, and makes the network increasingly decentralized. The BNB supply cap is about 168 million tokens and Binance intends to burn until 100 million tokens remain in circulation. This will take about 5-8 years to complete, according to Binance. The network’s most recent quarterly burn wiped out over 1 million tokens, worth about $639 million, from circulation.

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However, the latest update from its blog now says the BEP-95 burn “will continue functioning” even after the above target is attained. With the burn, Binance expects the intrinsic value of the BNB token to increase in tandem with demand. The network notes that validators and delegators may receive fewer tokens from staking, but the “fiat-denominated value of their rewards may increase.” Moreover, BNB has multiple use cases that benefit all holders of the token.

Currently, BEP-95 is in the draft stage and the network is yet to give a specific date for its implementation.

Several blockchains use the crypto-burning mechanism to create token scarcity and a subsequent increase in token value. Ethereum, for instance, uses the EIP-1559 for this purpose. 

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BNB price action

BNB, the fourth-largest cryptocurrency by market cap, was trading at $494 at press time, according to our data. The token has gained 0.8 percent in the day, and 4.8 percent week-over-week. Similar to other digital assets, BNB has rallied fueled by the Bitcoin-led gains. Crypto investor and YouTuber Lark Davis expects “good things” for the BNB price following its launch of a $1B growth fund.

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New proposal aims to raise Binance Coin value by burning BSC fees

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Amid the ongoing rally of Binance’s native token, Binance Coin (BNB), the developers of Binance Smart Chain (BSC) have proposed more measures to maintain the token’s deflationary model and improve its intrinsic value.

According to a new Binance Evolution Protocol, BEP-95, BSC developers are considering introducing a real-time burning mechanism for a portion of gas fees to reduce BNB supply and drive BNB value higher by increasing the demand. According to the BEP, BNB holders will decide how to dispatch the BSC gas reward.

Releasing the proposal on Friday, BSC developers noted that the new BEP might decrease the total amount of BNB that validators and delegators obtain from staking. The burning mechanism will be enabled by introducing governable parameters for two system smart contracts for collecting gas fees.

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Created by Binance in 2017, BNB is a deflationary token by design, meaning that Binance burns a percentage of the BNB supply every three months to maintain the token’s value. Binance will stop burning BNB once 50% of the initial supply has been burnt and only 100,000,000 BNB remain.

The latest BNB token burn took place last Monday, with Binance burning 1,335,888 BNB ($640 million) in its 17th quarterly burn.

The proposal comes amid BNB seeing a major rally recently, with the token breaking above $500 on Wednesday. At the time of writing, BNB is the third-largest cryptocurrency by market capitalization after Bitcoin (BTC) and Ether (ETH). The token is trading at $495, up around 44% over the past 30 days. BNB’s all-time high was recorded in May 2021, with the token surging to as high as $686, according to CoinGecko.

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The latest BIP, which occurred in August, is similar to a new transaction fee mechanism implemented for Ethereum’s London upgrade. According to Etherchain, the current average ETH burn rate amounts to 3.76 ETH or $15,448 per minute.

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BinanceUS Blamed the 87% Bitcoin Flash Crash on Algorithm Bug

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A day after the massive 87% flash crash on its trading platform, Binance US has blamed it on an algorithm bug.

The US branch of the leading cryptocurrency exchange explained that yesterday’s severe flash crash that saw BTC’s price dumping from $65,000 to $8,700 in mere seconds was because of a bug in the trading algorithm.

  • CryptoPotato reported yesterday when the price of bitcoin nosedived from its near all-time high level to below $10,000 on Binance US.
  • Other trading platforms, such as Kraken and FTX, also saw flash crashes as BTC dropped more on those two exchanges than it did in reality.
  • Although these flash crash events do occur from time to time, an 87% drop (the one on Binance US) is something that caught the attention of the public.
  • The company decided to explain what happened in a letter shared with Bloomberg. It reads that the problem came from an algorithm bug.
  • “One of our institutional traders indicated to us that they had a bug in their trading algorithm, which appears to have caused the sell-off. We are continuing to look into the event but understand from the trader that they have now fixed their bug and that the issue appears to have been resolved.”
  • A flash crash is an event in which the price of the underlying asset falls hard before it immediately recovers to its previous levels.
  • It could be particularly damaging to traders using leverage as it can liquidate their positions in an instant.
  • Another recent one in early October saw BTC dropping by several thousand dollars once more on Bitstamp following a massive sell order of over 210 bitcoins.

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