Permanently removing cryptocurrency tokens from circulation by sending them to an inaccessible address, reducing supply.
Token burning is the permanent removal of cryptocurrency from circulating supply by sending tokens to a dead address (a wallet with no private key, making the tokens irretrievable). Burns reduce total supply, which — if demand stays constant or grows — can increase per-token value. Burns serve multiple purposes: deflationary pressure (EIP-1559 burns a portion of every Ethereum transaction fee), protocol revenue sharing (buyback and burn uses protocol revenue to purchase and destroy tokens), and supply management (projects burn unsold ICO tokens or excess supply). Ethereum's EIP-1559 has burned over 4 million ETH since August 2021. Some tokens have automatic burn mechanisms on every transaction, while others conduct periodic manual burns. The effect on price depends on the burn rate relative to emission rate and market demand.
Token burning permanently removes tokens from circulation by sending them to an address from which they can never be retrieved (a 'dead' or 'null' address with no known private key). Burns create deflationary pressure — reducing supply while demand remains constant theoretically increases per-token value. Different protocols implement burns differently: Ethereum's EIP-1559 burns a base fee portion of every transaction (making ETH potentially deflationary during high usage), BNB conducts quarterly burns based on trading volume, and Shiba Inu has community-driven burn mechanisms. Not all burns are equally meaningful — burning a small percentage of a massive supply has minimal price impact, while burning transaction fees on a high-activity chain creates consistent deflationary pressure. The economic impact of burns also depends on the token's overall supply dynamics: if new issuance exceeds burns, the net supply still increases despite the burn mechanism.
Since EIP-1559 activated, Ethereum has burned over 4 million ETH (~$12B+ at current prices). During periods of high network activity, ETH becomes deflationary — more ETH is burned in fees than created through staking rewards, reducing total supply.
Not necessarily. Burns reduce supply, but price also depends on demand. If demand is declining faster than supply is burned, the price still falls. Also, if the market has already priced in expected burns, the actual burn events may not create additional price appreciation. Burns are one factor among many in token valuation.