BEP-95 is a Binance Evolution Proposal that brings a real-time write mechanism to BNB Chain. It aims to make BNB’s tokenomics dynamic and further deploy the network.
What is the BEP-95 Protocol?
The BEP-95 protocol is a mechanism introduced to speed up the BNB burning process and make BNB Chain more decentralized. With this protocol, it is aimed to make the BNB token economy more dynamic. In addition, according to the statements made, burning rates will be able to be changed through governance.
On the other hand, there are theories that after the implementation of this mechanism, the supply of BNB will decrease and the price will rise. It is also emphasized that users will have voting rights according to the amount of staked BNB.
How Does BEP-95 Work?
With BEP-95, the network will burn a flat rate of the gas fee of each block that validators collect. The exact rate will be determined through the governance mechanisms of the blockchain. Burns will continue even after BNB Chain reaches its target of 100 million BNB. By reducing the supply of BNB, there is upward pressure on the price of the coin.
BEP can also reduce the amount of BNB delegates and validators received. However, with upward price pressure, the value of the fiat may also increase, offsetting any decline in coins. To technically implement this, the network collects the gas fees of each block and divides it between two smart contracts:
- System Reward Agreement: 1/16 of the gas fees will enter the System Reward Agreement until it reaches a maximum of 100 BNB. These coins will be used as cross-chain package subsidies.
- ValidatorSet Agreement: All other gas fees will go into the ValidatorSet Agreement and will be shared daily with authorizers and validators through the BNB Beacon Chain.
There is a burnRatio variable in the ValidatorSet Contract to perform a write. Upon completion of each block, a validator will sign a transaction that transfers gas fees to smart contracts. The deposit functionality includes typing logic that triggers the simple formula.
BSC Verifiers will be able to vote through bids to change the amount of burnRatio. This governance mechanism takes place on the BNB Token Chain and any community member can submit a proposal for review with a minimum deposit of 2,000 BNB. All BNB deposited behind a bid and in the vote are refunded after a decision is made.
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