![]() On occasion, crypto projects will burn their tokens in much the same way that companies buy back their shares, absorbing the cost of stocks and returning value to investors in the form of a higher price for the security. Inversely, if there’s an abundance of an asset that doesn’t meet the demand for it, the asset’s price will often fall.īy reducing the supply of tokens, burning tokens can create an imbalance in relation to demand that usually moves the price of the token upwards because of the asset’s increased scarcity. If there’s less of an asset available to investors than there is demand for it, the asset will command a higher price as it’s traded. An asset’s price can be thought of as a relationship between supply and demand. Sending a token to a burn address effectively removes the digital asset from its overall supply, locking it up in the hands of nobody and preventing the asset from ever being traded again.īurning tokens can lead to an increase in the price of those tokens that are still in circulation. Burn addresses are also sometimes referred to as eater addresses. First up: what does a token burn actually entail? The act of burning a digital asset involves sending it to a place from which it can never be retrieved, also known as a burn address, which effectively removes the digital asset from circulation by locking it up for eternity.Ī burn address is a digital wallet that can’t be accessed because it doesn’t have a private key attached to it, like a lock that someone never built a keyhole for.
0 Comments
Leave a Reply. |