What is token burning & how does it work?

The goal of token burning is to remove a certain quantity of a token from the circulating supply. One of the most popular ways crypto projects carry out a burn is to buy a certain amount of tokens from the market to get it out of circulation. These tokens are then transferred into a frozen private address called a Burn address.

What Cryptos use token burning?

While the major cryptos (Bitcoin and Ethereum) don’t have token burning programs, many strong Altcoins use it. For instance, Binance has a target of burning 100 million BNB tokens, while there are similar practises for both USDT Tokens (issued by Tether) and XRP coins (issued by Ripple). How does token burning work?

What does it mean to burn crypto?

“Burning” crypto means permanently removing a number of tokens from circulation. This is typically done by transferring the tokens in question to a burn address, i.e. a wallet from which they cannot ever be retrieved. This is often described as destroying tokens. A project burns its tokens to reduce the overall supply.

How does a token burn affect the value of a community holder?

For example, Project X conducts a token burn. Afterwards, the supply reduces and the value of the token appreciates by 10%. Accordingly, this has made every community holder’s token more valuable than it was before the burn.