Buy and Burn

Definition ∞ Buy and burn describes a deflationary mechanism employed by cryptocurrency projects where a portion of generated revenue or a specific fund is used to repurchase native tokens from the open market. These acquired tokens are then permanently removed from circulation, typically by sending them to an unrecoverable address. This process reduces the total supply of the token, aiming to increase scarcity. It can potentially enhance the value of remaining tokens if demand remains constant or grows.
Context ∞ Crypto news often highlights buy and burn programs as a strategy for value accrual and community incentivization within decentralized protocols. Reports frequently cover the volume of tokens burned, the frequency of these events, and their impact on token price or market capitalization. Such mechanisms are a significant factor in analyzing a digital asset’s long-term economic model and investor appeal.