"When a token burn happens, the total supply of that token in circulation decreases. Another way to look at it: imagine you hold 1,000 tokens out of 10 million total. You own 0.00001% of the supply. After a 50% burn, you would own 0.00002% of the total supply. On paper, your stake has grown. However, this is where things get interesting and where most people misunderstand burns. The technical metrics are straightforward, but the real-world implications are complex."
"Token burns are a key part of many projects' tokenomics. They permanently remove coins from circulation, but supply cuts alone don't guarantee price gains. Burns work best when supported by strong fundamentals, meaningful burn volume and rising demand. Market trends, investor sentiment and burn transparency all shape price impact. Tokens with high burn rates, like Shiba Inu, haven't seen matching price growth because demand didn't rise with reduced supply. BNB shows that consistent, revenue-backed burns and strong ecosystem activity can drive lasting deflationary pressure."
Token burning removes tokens by sending them to unusable wallet addresses with no private key, permanently reducing circulating supply. Reduced supply increases each holder's proportional stake on paper, but price effects depend on demand and market dynamics. Burns generate meaningful impact only when combined with strong fundamentals, significant burn volume, rising demand, transparent mechanisms, and healthy ecosystem activity. Investor sentiment, market trends and burn transparency shape real price outcomes. High burn rates without increasing demand can leave prices stagnant. Consistent, revenue-backed burns within an active ecosystem can create sustained deflationary pressure and stronger long-term value support. Removing menu items without attracting more customers does not make a restaurant better.
Read at Cointelegraph
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