How Are Token Burning Mechanisms Used to Manage Treasury Token Supply?

Token burning permanently removes tokens from circulation by sending them to an inaccessible 'burn' address. DAOs use this mechanism to reduce the total supply, which is a deflationary measure designed to increase the scarcity and potential value of the remaining tokens.

This can be funded by a portion of protocol fees or by burning treasury-held tokens, directly managing the treasury's own token holdings and mitigating inflation.