How Is the ‘Burn Rate’ of a Token Used to Manage Supply and Incentivize Loyalty?

A token burn rate refers to the periodic destruction of a portion of the token supply, usually achieved by sending tokens to an unrecoverable address. This mechanism reduces the total circulating supply, creating scarcity.

For loyal users, this scarcity can lead to price appreciation, rewarding their long-term holding. The burn is often funded by transaction fees or a portion of company profits, aligning the token's value with the platform's success.