You often hear that a project announced a token burn, and I, for one, didn't know and asked:
What does burning mean? Why do they do it? And does it raise the price?
Focus with me and you'll understand the topic in 5 points
1️⃣ What is token burning?
Burning is the process of permanently removing a part of the currency from circulation.
This means the currency is sent to a special wallet called Dead Wallet which has no access key.
👉 Result: This currency disappears forever
2️⃣ Why do projects burn their tokens?
🔥 Reducing supply
🔥 Increasing the scarcity of the currency
🔥 Increasing value in the long term
🔥 Proving the team's commitment to the project
3️⃣ How is burning done?
The project sends a certain amount to a non-usable wallet.
Sometimes they burn a percentage of the fees they collect (like BNB).
It can be periodic or one-time.
4️⃣ Examples of projects that burn tokens:
BNB: Burns a portion of the currency every quarter.
Shiba Inu: It has a continuous burning mechanism.
LUNA Classic: It has started relying on burning to support the price.
5️⃣ Does burning always raise the price?
Not necessarily immediately!
📌 If supply decreases and demand is stable or increases 👉 the price may rise.
📌 But if the project is weak 👉 burning won't make a difference.
This means burning is a support tool, not a magic wand.
Summary:
Token burning = Reducing supply 🔥
This can help the price, but the project must be strong and demand must be present.
If you benefited from the post, share it with your friends and mention anyone who doesn't understand what burning means 💬
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