Token burning is like permanently taking money out of circulation. A certain amount of cryptos are sent to a special wallet that nobody can access. These coins can’t be used again because the “key” needed to access them is lost or destroyed. Since those coins are gone for good, there are fewer left in the market. Fewer coins in circulation can make the remaining ones more valuable (like how rare collectibles cost more).
Token burning prevents too many coins from flooding the market, keeping prices more stable. For example, imagine a game where you destroy some of your in-game currency; now the remaining currency becomes more valuable because there’s less of it. That’s basically how burning crypto works!
It's a way to make a cryptocurrency more valuable or stable by permanently removing some of it from use.
Understanding the Basics:
Every cryptocurrency user has a
special wallet address, similar to an email address, which lets them send and receive digital coins.
When a coin is “burned”, it’s sent to a special wallet called a “burner” or “eater address”, one that can only receive funds but can never send them.
These burner addresses are also called a black hole for crypto.
Once coins go, they are gone forever because nobody has the key to retrieve them.
Why Burn Crypto?
Less supply = More value (like how rare watches cost more).
Helps control inflation (too much DeFi currency in circulation can lower its price).
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