Token Burn

Definition ∞ A token burn is a process where a certain amount of cryptocurrency tokens are permanently removed from circulation by sending them to an unspendable wallet address. This action reduces the total supply of the token. Token burns are typically undertaken to potentially increase the scarcity and value of the remaining tokens. They are a deliberate mechanism within a token’s economic design.
Context ∞ Token burns are frequently reported events in the digital asset space, often announced by project teams to signal a change in tokenomics or to influence market sentiment. Discussions surrounding token burns often focus on their potential impact on token price and supply dynamics. Investors analyze these actions to understand the underlying economic strategy of a digital asset and its potential for future appreciation.