Crypto Tokens Get Burned: What You Need to Know

Token burning in crypto is a permanent removal of tokens from circulation, done by sending them to an inaccessible wallet or deleting them inside the network's code.

The process aims to create scarcity and reduce supply, but it doesn't guarantee a higher price. According to basic economics, the same demand spread across fewer tokens should lift each token's price, but the evidence is mixed.

There are four main ways projects burn tokens: fee burns, scheduled burns, voluntary burns, and redemption burns.

Fee burns destroy transaction fees, while scheduled burns occur at set intervals. Voluntary burns are initiated by project teams or token holders, and redemption burns happen when tokens are turned back into the asset they represent.