Token Burns

Definition ∞ Token Burns involve the permanent removal of cryptocurrency tokens from circulation. This process typically sends tokens to an unspendable address, effectively reducing the total supply of that digital asset. Token burns are often executed to manage supply, increase scarcity, or as a deflationary mechanism to potentially boost the value of remaining tokens. They can also be a part of protocol economics, where transaction fees or a portion of revenue are destroyed.
Context ∞ Token Burns are a common practice in many cryptocurrency projects, influencing market dynamics and investor perception. Discussions often center on the effectiveness of burns as a value-accrual mechanism and their long-term impact on token economics. Future developments may see more sophisticated burn strategies, tied to network usage or specific protocol milestones, to maintain economic stability.