Coin Burn is the process by which a specific cryptocurrency project permanently removes a quantity of its tokens from circulation, making them unusable or sellable again.
🔹 How is the burn done?
Tokens are sent to a special address (Wallet) that cannot be accessed by private keys, often referred to as the burn address (Burn Address).
Once the tokens arrive there, they become irretrievable, as if they have disappeared from the market.
🔹 Why is burning done?
1. Reducing supply ➡ Increases the scarcity of the token, which may enhance its value in the long term.
2. Supporting the price ➡ Reducing supply can decrease selling pressure.
3. Incentives for investors ➡ Demonstrates the team's commitment to the interests of token holders.
4. System mechanism ➡ Some tokens like BNB and Shiba Inu have periodic burn plans.
🔹 A simple example:
If you have 100 million tokens in the market, and the project burns 20 million, the available supply becomes only 80 million, which may increase the value of each token if demand remains the same or increases.