Why Do Cryptocurrency Projects Burn Tokens?
Adekunle Joshua
Cryptocurrency projects face challenges in maintaining asset prices, and some use "coin burn" to manage supply by removing tokens from circulation
Coin burn can involve buying back coins, community initiatives, or developer upgrades that permanently remove tokens from supply
Tokens are sent to a burn address, rendering them inaccessible and ensuring permanent removal from circulation
Token burning can be voluntary or implemented through smart contracts or protocols
Reasons for token burning include proof-of-burn for network security, increasing the value by reducing supply, and managing price fluctuations
Pros of burning tokens include curbing inflation, maintaining or increasing value, and creating deflationary effects.