How Does a Token Burn Mechanism Counteract the Effects of a Large Supply Release? ▴ Learn

How Does a Token Burn Mechanism Counteract the Effects of a Large Supply Release?

A token burn mechanism permanently removes tokens from the total supply, creating a deflationary pressure. By burning a portion of the tokens, the project can offset the inflationary pressure caused by a large supply release from vesting or staking rewards.

This action is a deliberate attempt to manage supply-side economics and support the token's price.

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