Token burn, now commonplace for new crypto projects? – BeinCrypto France

As investors struggle to optimize their investments, projects seem increasingly inclined to be deflationary and optimize token burn.

Beyond Bitcoin, the first of the cryptocurrencies and counting on a limited supply, the projects that succeeded it did not necessarily seek to limit their total supply to such a small quantity of tokens. On the contrary, some have hundreds of millions of tokens, even billions and even trillions, as is particularly the case for some memecoins.

Similarly, recently, token burn also seems to be in the crypto sphere and manages to create some hype within the communities. Indeed, through a deflationary strategy, investors rightly or wrongly expect the price of the token concerned to increase regularly, beyond the cyclical aspect of the market (bull run and bear market).

As a reminder, token burn refers to the process of removing a token from circulating supply of a project concerned. The token burn is verifiable on the blockchain, which makes it possible to confirm with transparency the initiative put in place and its smooth running. When the tokens are withdrawn from circulation, the supply will update to take into account the new quantity of tokens in circulation. For more information about the process, we have already discussed the subject at Be[In]Crypto France.

Generally, depending on the project, token burn sometimes results in the voluntary sending of tokens to a dead wallet. This is particularly what is currently happening for the Shiba Inu project, which burns billions of tokens a week, or even the LUNC, of ​​which more than 3 trillion tokens have been sent to the dead wallet available.

In the other case, the token burn is set up by a redemption of tokens by the institution in charge from the trading fees collected or from the sale of tokens, for example. This would soon be the case for the LUNC token, with a 1.2% burn tax scheduled for September 12 on each purchase or sale of tokens.

LUNC (Terra Classic) and SHIB (Shiba Inu); masterclass in token burn

As the Terra (now Terra Classic) ecosystem collapsed over the spring and its main token experienced hyperinflation that was rare and unexpected in the crypto sphere, gradually an incredible amount of tokens were pulled from the traffic.

At the end of August, more than 3 trillion tokens that have been burned. This total was reached thanks to successive sendings to the inferno wallet, or the dead wallet which receives the burned tokens. More recently, the price of the token panicked as rumors that include Binance in the token burn continue.

On the other hand, according to the Shibburn, hundreds of millions of SHIBs are burned daily. On August 31, for example, more than 400 million SHIBs were withdrawn from circulation, an increase of + 180% compared to the previous day. Although the dollar amounts are small, there are several billion tokens that are burned each week.

Both the Shiba INU project and the Terra Classic seek to multiply burn initiatives to accentuate and intensify the withdrawal of tokens creating a certain hype within the community, even if the process can be slow and it is necessary to be patient to see a real influence on the price level.

An initiative not only restricted to tokens with an almost unlimited supply

While we find this process in many new projects that now seek from the outset to be deflationary and give investors a feeling that token prices will constantly increase, high-cap tokens also proceed in this way.

Ethereum, through its London update, started token burn in August of the year 2021, with EIP-1559. Through this process, millions of Ethereum have already been burned, for a total value of several billion dollars.

burn ethereum

On the BNB Chain, Binance’s BNB token also has its own burn program of its native token. While the max supply is 200,000,000 BNB, the objective of the crypto exchange is to continue its burn program until the amount of tokens in circulation is halved. Now, since the end of December, the “Quarter burn” made from part of the profits of the Binance exchange has been replaced by an auto-burn, which will cease when 100 million tokens have been burned.

In parallel, Filecoin (FIL) or Stellar (XLM) tokens also have a burn mechanism implemented within the project.

This built-in mechanism is also being adopted by a multitude of new and small projects such as Brokoli Network, tamadoge or Space SIP.

Indeed, the Tamadoge project, already popular within the industry even before its release, will also have a burn system implemented on its Tama store, with a 5% fee on each transaction for these purposes.


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Token burn, now commonplace for new crypto projects? – BeinCrypto France

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