Analyzing the impact of the latest BNB Chain burn event on its stablecoin ecosystem

• With a market capitalization of $6.63 billion, BNB Chain was the third largest stablecoin repository.
• Market capitalization has shrunk sharply, nearly 27%, since February.

Binance announced a major token burn event that was set to disrupt the supply of stablecoins on the BNB chain. [BNB].

Is your wallet green? Check Binance Coin [BNB] earnings calculator

In a tweet dated May 17, the crypto giant said it will remove a sizable portion of Binance-pegged USDT, USDC, and BUSD tokens from the BNB chain.

Binance added that an equivalent number of these tokens will be released on their respective native networks.

The strategic move could drive shortages and subsequent demand for stablecoins that already boast a market capitalization of more than $130 billion, according to CoinMarketCap.

Today #Binance will burn a significant amount of Binance-pegged USDT and USDC tokens on the BNB chain.

The equivalent amount of these tokens will then be released onto their native networks, which were used as collateral.

—Binance (@binance) May 17, 2023

The Binance Stablecoin Ecosystem

In recent years, stablecoins have become a crucial part of the digital asset industry, serving as the primary channel through which fiat currency enters and exits the market.

Most stablecoins are issued natively on Ethereum [ETH]using the ERC-20 standard, which limits its use in other chains.

Binance offers a wrapped version of these stablecoins. This helps transport coins to other chains to increase interoperability.

Additionally, with a market capitalization of $6.63 billion, BNB Chain was the third largest stablecoin repository, according to data from DeFiLlama.

USDT took on the lion’s share of on-chain supply, roughly $3.38 billion at press time.

Source: DeFiLlama

However, as is evident, the market capitalization has shrunk considerably, almost 27%, since February.

This followed after BUSD issuer Paxos halted issuance of the stablecoin. It led to a flurry of BUSD redemptions for other assets. The chart below summarizes the reduced dominance of BUSD on the BNB Chain

Source: DeFiLlama

Checking the status of BNB

News of the burn event had a positive impact on the price of the exchange token, BNB, as it absorbed gains of 1.24% in the 24-hour period, data from CoinMarketCap revealed.

How much is 1,10,100 BNB worth today?

The offer of the main addresses increased notably during the last week, according to data from Santiment. A plausible reason behind this could be the positive MVRV ratio. It can spur investors to accumulate more BNB in ​​search of higher profits.

However, daily active addresses were down sharply from the highs set in the first week of May.

Source: Feeling

source: ambcrypto.com