What Is Burning?

By burning tokens, it permanently removes them from the circulating supply. During the process of burning, the project’s team typically sends tokens to a burn address where they are no longer accessible.

There are many reasons why a project’s team would burn tokens. One is because it wants a deflationary token, and burning ensures the total supply continues to decrease. Another reason is that the token is pegged to another asset. In this case, burning, whether manually or algorithmically, helps ensure the token’s price is maintained as the pegged asset’s price.

SafeMoon is an example of a project that burns tokens.

Key Takeaway

Burning refers to the removal of cryptocurrency tokens from circulation, thus reducing a token’s total circulating supply.

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