Token Burn
Permanently destroying tokens to create scarcity
Definition
Token burning is the permanent removal of cryptocurrency tokens from circulation by sending them to an unspendable wallet address (a "burn address"). Burning reduces total supply, which can increase scarcity and potentially raise the price of remaining tokens. Some protocols use automatic burning — for example, Ethereum burns a portion of each transaction fee since EIP-1559. Token burns are also used by projects to return value to holders.
Example
Binance burns BNB tokens quarterly based on trading volume. In a typical quarter, Binance may burn $100 million worth of BNB, permanently removing those tokens from supply. With a fixed maximum supply, each burn makes remaining tokens a larger percentage of total supply, creating deflationary pressure on price.
Related Terms
Frequently Asked Question
What is a token burn?
A token burn permanently removes cryptocurrency from circulation by sending it to an unspendable address. It reduces supply, increasing scarcity. Ethereum and Binance use burns to make their tokens deflationary.
APA Citation
Last updated:
· Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.