Token burning is the process of taking a specific number of coins or tokens out of circulation by sending them to an unusable or permanently inaccessible address.
Recently, an increasing number of projects have started to integrate built-in mechanisms that periodically and automatically burn a portion of their existing supply.
As the deflationary nature of token burning aligns with the expectations of token holders regarding its impact on token value through supply, this process is likely to become a standard. Particularly in the early stages of a project, a decreasing supply mechanism may serve as a counterbalance for token inflation (refer to Token Models).
In this article, we will delve into the effects and mechanics of token burns. We will discuss the economic and narrative considerations, explore various burn models, and highlight key takeaways.
1. Effects on Economics & Narrative2. Burning Types & Examples3. Key Takeaways