Bitcoin Forum

Binance is issuing some reverse splits on its bearish leveraged tokens, which are performing really badly, but how a maneuver like this, practically, works?

I know that the procedure is all about "removing" a certain amount of tokens in circulation, in order to forcibly raise the price, and, consequently, even your amount gets recalculated according to the original proportion of the split, but how this procedure actually works?

How can an exchange modify your personal supply?



-Important disclaimer: I DO NOT own any of those tokens, it's just curiosity.

A reverse split means, in essence, burning x number of tokens or coins. Binance would need to buy x tokens at market price and destroy them or, if the token is managed by a team or party they would need to show proof of the destruction of whatever number of tokens they claim. A split 4 to 3 for example would need to show proof of destroying 1 of every 4 tokens out there.

My take is that this is very easy on some chains, like anything that is on ethereum can be sent to 0x0000000... but on other chains it may be a function embedded in their contracts or software.

If you are a long-term and long-term investor then I think you will understand the process of burning coins and limiting inflation , Each project has a different way of exchanging tokens and burning like Binance. the monthly cycle will buy back BNB and burn it gradually then they process the BNB deposit into the wallet 0x00000000... This is one of the basic processes that projects do to burn their coins.