Token Burn
The deliberate destruction of a quantity of tokens by sending them to an unspendable wallet address. Token burns reduce the circulating supply, which can increase scarcity. Some protocols conduct regular token burns as part of their tokenomics model.
Why It Matters
Token burn refers to the process of permanently removing a certain number of tokens from circulation, often to create scarcity. This is significant for investors as it can impact supply dynamics and potentially increase the value of remaining tokens.
Example
If a cryptocurrency has 1 million tokens and regularly burns 10,000 tokens, the total supply decreases over time. This reduction in supply may lead to increased demand and potentially raise the token's value.
Beginner Context
For beginners, understanding token burns introduces the concept of supply management in the crypto world. It emphasizes how projects can influence their market through strategic decisions on circulation.
Mike Starr
Founder, CryptoWizardTools · M.S. Organizational Management
Last reviewed: August 2026
Related Terms
Algorithmic Stablecoin
A type of stablecoin that maintains its peg not through direct collateral reserves, but through software algorithms that automatically expand or contract the token supply in response to price changes. Unlike asset-backed stablecoins, algorithmic models are considered higher risk.
Confirmation
The addition of a block containing a transaction to the blockchain. Each subsequent block added on top counts as an additional confirmation, making the transaction progressively harder to reverse. More confirmations mean more security.
ICO
Initial Coin Offering. A fundraising method where new cryptocurrency projects sell tokens to early investors to raise capital for development.
Wallet
Software or hardware used to store, send, and receive cryptocurrency. Wallets store private keys that prove ownership of digital assets.
Paper Wallet
A physical document containing a cryptocurrency public address and private key, used as a form of cold storage.