Token Burn
Permanently removing tokens from circulation — deflationary mechanism reducing supply.
Token burn is the process of sending cryptocurrency to a "burn address" — an address no one has the private key for, making tokens permanently unusable and removed from circulation.
Burn addresses:
•Ethereum: 0x000000000000000000000000000000000000dEaD
•Can verify it received tokens, but no one can spend them
Why projects burn tokens:
•Reducing total supply → deflationary
•If demand stays same, price rises
•Reward for token holders (reduces dilution)
•Tokenomics mechanism
Examples:
Binance BNB burn:
•Auto-Burn every quarter
•Formula based on BNB price and block count
•Goal: reduce supply from 200M to 100M BNB
Ethereum EIP-1559 burn:
•Base fee of every block is burned
•ETH becomes deflationary in bull market
•When fee > issuance → ETH supply decreases
Shiba Inu burn:
•Community burn initiatives
•Burn portal — trade and remove tokens
BTC vs burn:
•BTC has no burn mechanism
•Supply is fixed 21M
•Halving reduces new issuance
Warning:
•Burn alone doesn't guarantee price
•Project can print new tokens and negate burn effects
•Check tokenomics + vesting