What Is a Token Burn Mechanism and How Does It Affect Token Supply?
A token burn is the permanent removal of a certain number of tokens from the circulating supply by sending them to an unspendable address (a 'burn address'). This action reduces the total and circulating supply, which, assuming demand remains constant, creates a deflationary effect and puts upward pressure on the token's price.
It is often used to offset inflation or as a value accrual mechanism.
Glossar
Circulating Supply
Distribution ⎊ Circulating supply within cryptocurrency represents the total number of coins or tokens that are publicly available for trading and transfer, excluding those held in reserve by the issuer or locked in smart contracts.
Token Burn
Process ⎊ A Token Burn is the intentional, cryptographic destruction of a quantity of digital assets, executed by sending them to a publicly verifiable, non-recoverable address on the blockchain.
Token Burn Mechanism
Burn ⎊ The deliberate and permanent removal of tokens from circulation represents a core mechanism within cryptocurrency ecosystems, frequently employed to influence supply dynamics and potentially enhance the value of remaining tokens.