What Is the Relationship between Transaction Fees and a Deflationary Token Burn Mechanism?
In many deflationary token models, a portion of the transaction fees (gas or protocol fees) generated from network activity is automatically used to buy back and burn the native token. This creates a direct, positive feedback loop: as network usage and transaction fees increase, the token burn rate increases, leading to a faster reduction in supply and potentially increasing the token's value.
The transaction fee becomes the fuel for the deflationary mechanism.
