In recent times, the trend of token burning is very popular and some projects famously destroyed large amounts of digital assets. While projects have different burning plans, the overall effect is often the same, as token destruction reduces the circulating supply.

Blockchain projects burn tokens for specific benefits and goals

Token burning is a popular trend and the news often highlights specific projects like , , Shiba Inu as well as many other projects destroyed large amount of original tokens.

Last week, the developers already introduce a burning port, allowing the holder to burn the stock their. In return, those who burn rewarded for token destruction. SHIB currently has a burn rate of about 180,18% in the last 24 hours.

“On-chain votes for proposals 133 and 134 to burn 88,675 million Pre-Col-5” in the Community Pool (~$4.5 billion), in exchange for via on-chain swap and reduction of oracle_rewards_pool distribution from 3 to 2 years has been adopted!”, tweets.

In the first week of November 2021, the developer team burned 88.7 million and projects like burn native tokens every minute of the day. For example, after making an Improvement Proposal (EIP) 1559, more than 2.17 million has been permanently destroyed.

Read more  The Crypto Market Could Be About to Turn Around

“76,100” ($35,060,900) has been burned since the real-time burn upgrade -95", BurnBNB tweets.

Like SHIB, also has a burn rate, as the figures show 135 burned for 60 minutes and 4,477 ETH in 24 hours. There was a scheduled burn and the project destroyed the coin to reduce the overall supply.

Burning cryptocurrency is simply sending tokens to an invalid address

This process has been used by several developers and supported by the community. However, burning tokens does not mean that the tokens are literally engulfed in flames.

Most projects burn tokens just by sending digital coins to a dead address. This address is simply a black hole of funds because no one has the private key, aka sending money to the empty address.

Once the tokens are sent to the empty address, no one can use them anymore. Cryptocurrency burning schemes have been around for many years now, and the Counterparty project is one of the oldest to implement the idea of a burning mechanism.

Counterparty's Proof-of-Burn

Actually, Counterparty burned to start the project.

“All the XCPs that ever existed were respectively made available to those who realized the value of Counterparty and were willing to “burn” theirs to participate in Counterparty”, project explain in a blog post about the PoB process.

Read more  4 important lessons learned from the failure of FTX
token

Counterparty's Burn Address

Token burning mechanism brings a lot of benefits and several protocols according to the algorithm that uses combustion to distribute autonomously. While Counterparty uses proof-of-burn to launch XCP, most projects all burn coins to reduce the overall supply.

In a way, token burning is similar to buying back shares in the traditional stock market. Removing coins from the circulating supply causes become scarce, in order to make the rest of the coins in circulation more valuable.

Join our channel to get the latest investment signals!