How Does the Mechanism of “Burning” Stablecoins Work?

Stablecoin burning is the process of permanently removing tokens from circulation, often when a user redeems a fiat-collateralized stablecoin for its equivalent fiat currency. The issuer sends the stablecoins to an unspendable address, and the total supply is reduced.

This mechanism is essential for maintaining the 1:1 peg and managing the token's supply in line with the reserves.