Definition ∞ Base Fee Burn is a mechanism within certain blockchain protocols where a portion of each transaction fee is permanently removed from circulation. This process effectively reduces the total supply of the native cryptocurrency over time. The burning of fees is designed to adjust network transaction costs dynamically.
Context ∞ This deflationary mechanism, notably implemented in Ethereum’s EIP-1559, significantly influences the asset’s scarcity and value. It plays a central role in ongoing discussions about protocol economics and the long-term supply dynamics of cryptocurrencies. The impact on network stability and asset valuation is a key area of analysis.
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