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Burn
Burning refers to the removal of cryptocurrency tokens from circulation. During the process of burning, the project’s team typically sends tokens to a burn address where they are no longer accessible. Burning tokens permanently removes them from the circulating supply.
There are many reasons why projects burn tokens, including for deflationary reasons; burning ensures the total supply continues to decrease. Another reason is when a 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.