What is a Token Burn?

Token burning is the process where a cryptocurrency permanently removes part of its circulating token supply from circulation. Since cryptocurrencies are not physical coins, they cannot literally be burned. Instead, they are sent to a burn address. This is a wallet whose private key is unknown or inaccessible, making the wallet unreachable. Tokens sent to this address are lost forever.

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🕒 6:19 PM

📅 Nov 17, 2025

✍️ By chrison2

A token burn is the process of permanently removing tokens from circulation by sending them to a burn address.

The goal is to create scarcity, combat inflation, and potentially increase the value of the remaining tokens.

Token burns can be executed manually or automatically via smart contracts and are visible on the blockchain.

In practice, burns don’t always lead to price increases. Their impact depends heavily on market conditions and the project itself.

There are different types of burns, including scheduled, automatic, user-driven burns, and even burns during hacks or via Proof of Burn.

Notable projects that burn tokens include Binance Coin, Ethereum, Shiba Inu, Tether, and Stellar Lumens.

Burns can offer benefits such as scarcity, community involvement, and marketing value, but they also carry risks and may lack impact.

📍How Does Token Burning Work?

Token burning works by sending tokens to a burn address. A burn can be performed manually or automatically. Some blockchains use smart contracts to integrate token burning into their code. For example, Ethereum automatically burns part of the transaction fee (base fee). Other blockchains like Binance Coin announce periodic burns to their community.

Once tokens are sent to a burn wallet, this is publicly visible, allowing anyone to verify the number of tokens burned.

Here’s how it usually works:

1: Send to a burn address

Tokens of a given cryptocurrency are sent to a public wallet address (burn address) with no existing private key. This "dead wallet" typically looks like:

0x0000000000000000000000000000000000000000

2: Tokens are burned

These tokens are no longer tradable on the blockchain as they are locked in that address.

3: Circulating supply decreases

The total supply drops, potentially impacting supply and demand dynamics.

📍Advantages of Token Burn

Increased scarcity

Burning tokens reduces the total supply, increasing scarcity. This can raise the value of the remaining tokens.

Inflation control

Token burning can act as an anti-inflation mechanism, especially for cryptocurrencies that constantly issue new coins.

Investor trust

Burns signal long-term vision, which can build trust with the community.

Community engagement

Projects with community-driven burns see stronger investor loyalty and involvement.

Marketing boost

Burn announcements often attract attention and increase visibility.