Definition ∞ A token burn event is a process where a specific quantity of cryptocurrency tokens is permanently removed from circulation, typically by sending them to an unspendable address, often referred to as a “burner” address. This action effectively reduces the total supply of the token, which can potentially increase its scarcity and, by extension, its value if demand remains constant or rises. Token burns are often implemented as part of a deflationary economic model or as a mechanism to return value to holders. It is a deliberate, irreversible reduction in supply.
Context ∞ Token burn events are a common feature in cryptocurrency news, particularly when projects announce scheduled burns or implement burn mechanisms tied to protocol usage. Discussions often focus on the economic impact of these events on token price, supply dynamics, and investor sentiment. The transparency of on-chain burn transactions allows for public verification of the supply reduction, contributing to the credibility of the token’s economic model.
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