Token burning is the process of permanently removing a certain quantity of cryptocurrency tokens from circulation, typically by sending them to an unspendable address. This action reduces the total supply of the token, which can potentially increase its scarcity and value. It is often employed by projects to manage token economics, reward holders, or stabilize prices. This mechanism is a deflationary tool.
Context
Token burning is frequently reported in crypto news, especially when projects announce scheduled burns or implement burning mechanisms tied to transaction fees or protocol usage. News articles often analyze the impact of these events on a token’s price and market capitalization. Understanding token burning is essential for assessing the long-term economic model and value proposition of various digital assets.
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