🧠 Topic: How token burning works, why it's done, and why it can support the price (but not always)
🔥 Token burning (#Token burn) is the process of permanently removing coins from circulation. Usually, tokens are sent to a non-recoverable address (0x…dead), from which they cannot be retrieved.@CryptoSandra
The goal is to reduce supply → create scarcity → potentially raise the price.
🔍 Why burn tokens?
📉 Reduce inflation
🧨 Compensate for unlocks and farming
📈 Support the price (sometimes — temporarily)
🧩 Add utility to the token (e.g., burn = fee)
💥 Marketing hype (“We burned 10M tokens!”)
💡 Burning mechanics:
🔹 Part of the commission
— Example: Ethereum with EIP-1559 → part of the gas is burned
🔹 Automatically during transactions
— Example: LUNC, SafeMoon
🔹 Once a quarter or by DAO decision
— Example: #Binance burns BNB every quarter
🔹 When buying back from the market (buyback & burn)
— Example: PancakeSwap buys back and burns CAKE
📉 Why #burn ≠ price increase?
If the token is not needed by anyone → burning won't save it
If the emission exceeds the burn → inflation still wins
If burning happens against a dump — it's dust
If it's purely marketing → it's not fundamental, but a fake pump
📘 Examples:
✅ $BNB — burned based on trading volume → organic growth
✅ $ETH — burning depends on demand → deflationary during peak loads
❌ $LUNC — burning is loud, but the utility of the token is zero
🧠 Conclusion:
Burning can support the price, but only if the token has demand and utility.
🔥 Without demand, even if all tokens are burned — no one will buy what no one needs.
📖 In the next issue I will tell: What inflationary and deflationary tokens are, and why sometimes an increase in supply is normal. 📲 Subscribe to @CryptoSandra - here crypto becomes understandable, and alphas do not pass by.
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