#SATS Limited token issuance is a key element in project economics. Many teams, especially after #Ethereum developers implemented token #burning mechanism, try to pay special attention to maintaining deflation. So let's get to the bottom of it - why do projects burn already issued tokens!
🥅 Token burning is the process of removing coins from circulation. Developers destroy part of the #tokens , thus reducing the total number, bringing them additional value, and thus value (but it doesn't always work).
It is important to consider that only the project's own #assets are used for burning. A situation in which your tokens can be "deleted" without warning is not possible.
For example, sources of tokens can be:
• а portion of the project's profits;
• transaction fees;
• wrapped tokens when they are deployed into the original coin.
🛠 How burning occurs
It usually happens by sending tokens to a "burn address", after which they are completely out of circulation.
• A burn address is a "dead" wallet that cannot be accessed because it has no private key. Accordingly, it is impossible to get tokens from such a wallet. An example of such an address is 0x000...000dEaD.
• Each project can implement the burning process in its own way. For example, Binance uses two mechanisms at once. First, burning a part of $BNB received for gas payments in the BNB Chain. Second, automatic quarterly burning. This approach will reduce the total BNB supply by 50% in the long term.
❕ Keep in mind that the burn mechanism is not a panacea to price growth / stability. It is influenced by other indicators - general market situation, value / popularity of the project, etc. 🔥
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