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How Is a Token Burn Mechanism Typically Funded in a DeFi Protocol?

Token burns are funded by a portion of the protocol's generated revenue, like transaction or liquidation fees.
Greeks.Live16.11.25

How Is a Token Burn Mechanism Typically Funded in a DeFi Protocol?

A token burn mechanism is typically funded by a portion of the protocol's generated revenue, such as transaction fees, liquidation fees, or interest earned on assets. For example, a DEX might burn a small percentage of every trading fee collected.

This ensures the burn is sustainable and directly links the deflationary pressure to the utility and usage of the protocol.

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What Is the Economic Impact of a Scheduled versus an Unscheduled Token Burn?

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