Definition
The intentional and permanent destruction of cryptocurrency tokens by sending them to an address no one controls (a 'burn address'). Used to reduce circulating supply and potentially increase scarcity.
Why It Matters
Token burning is a deflationary mechanism. If supply decreases while demand stays constant or grows, the remaining tokens may increase in value.
Example
Ethereum burns a portion of transaction fees with every block (EIP-1559), permanently removing ETH from circulation and reducing inflation.
Related Terms
Token
Tokenomics
Market Cap
Ethereum