Why token burning so much important?
A particularly uncontrollable element of cryptocurrency is inflation. The crypto market’s inflation rates can quickly soar, which can soon become an issue that makes the market less stable. So, through coin burning, the inflation rates within the industry can be curbed.
On the other hand, burning cryptocurrency can help to increase its value. Again, this relates to supply and demand. If there are fewer coins in circulation and the demand exceeds the supply that can be provided, the price will most likely shoot up. Hence why developers often burn huge amounts of their native tokens.
Many projects resort to burning part of the issued coins. In some cryptocurrencies, burning was originally provided for by the network algorithm, in others, the decision was made as changes were made to the protocol.
In addition, the implementation of the burning proves that the developers are serious about the development of their project and intend to work on increasing the value of the cryptocurrency.
Examples of Cryptocurrency Burning
When burning tokens, crypto projects send the tokens that they want to be removed from circulation to a frozen account called a “burn address.” This is a special type of cryptocurrency account in that it receives tokens but can’t let them out after they are in. The burn address doesn’t have the private key for accessing what it holds.
Many projects resort to burning part of the issued coins. In some cryptocurrencies, burning was originally provided for by the network algorithm, in others, the decision was made as changes were made to the protocol.
Binance Coin (BNB) developers indicated their intention to burn coins back in the White Paper, planning to reduce the initial circulation of coins by half — from 200 million to 100 million.
AVAX burning all their fees and even created site about it: https://burnedavax.com/ , 1.6M avax burned so far.
The development concept of Ripple also involves the gradual development of coins, which, according to the creators, avoids inflation. To do this, the developers have created a burning mechanism in which 0.00001 XRP is destroyed with each transaction.
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