{"id":21320,"date":"2022-12-27T10:36:26","date_gmt":"2022-12-27T10:36:26","guid":{"rendered":"https:\/\/zebpay.com\/in\/?p=21320"},"modified":"2022-12-27T10:41:54","modified_gmt":"2022-12-27T10:41:54","slug":"what-is-token-burn","status":"publish","type":"post","link":"https:\/\/zebpay.com\/in\/blog\/what-is-token-burn","title":{"rendered":"Token Burning: What, Why and How"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/zebpay.com\/in\/blog\/what-is-token-burn\/#What_is_a_Token_Burn\" title=\"What is a Token Burn?\">What is a Token Burn?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/zebpay.com\/in\/blog\/what-is-token-burn\/#How_Does_Token_Burn_Work\" title=\"How Does Token Burn Work?\">How Does Token Burn Work?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/zebpay.com\/in\/blog\/what-is-token-burn\/#Process_of_Token_Burn\" title=\"Process of Token Burn\">Process of Token Burn<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/zebpay.com\/in\/blog\/what-is-token-burn\/#Examples_of_Token_Burning\" title=\"Examples of Token Burning\">Examples of Token Burning<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/zebpay.com\/in\/blog\/what-is-token-burn\/#BNB\" title=\"BNB\">BNB<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/zebpay.com\/in\/blog\/what-is-token-burn\/#Ethereum\" title=\"Ethereum\">Ethereum<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/zebpay.com\/in\/blog\/what-is-token-burn\/#Shiba_Inu\" title=\"Shiba Inu\">Shiba Inu<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/zebpay.com\/in\/blog\/what-is-token-burn\/#Pros_and_Cons_of_Token_Burning\" title=\"Pros and Cons of Token Burning\">Pros and Cons of Token Burning<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/zebpay.com\/in\/blog\/what-is-token-burn\/#Pros\" title=\"Pros\">Pros<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/zebpay.com\/in\/blog\/what-is-token-burn\/#Maintaining_the_price\" title=\"Maintaining the price\">Maintaining the price<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/zebpay.com\/in\/blog\/what-is-token-burn\/#Building_a_robust_community\" title=\"Building a robust community\">Building a robust community<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/zebpay.com\/in\/blog\/what-is-token-burn\/#Cons\" title=\"Cons\">Cons<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/zebpay.com\/in\/blog\/what-is-token-burn\/#Lost_opportunities\" title=\"Lost opportunities\">Lost opportunities<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/zebpay.com\/in\/blog\/what-is-token-burn\/#A_large_number_of_tokens_are_needed_to_make_an_impact\" title=\"A large number of tokens are needed to make an impact\">A large number of tokens are needed to make an impact<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/zebpay.com\/in\/blog\/what-is-token-burn\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/zebpay.com\/in\/blog\/what-is-token-burn\/#FAQs_on_Token_Burning\" title=\"FAQs on Token Burning\">FAQs on Token Burning<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/zebpay.com\/in\/blog\/what-is-token-burn\/#What_is_Token_Burn\" title=\"What is Token Burn?\">What is Token Burn?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/zebpay.com\/in\/blog\/what-is-token-burn\/#What_are_the_different_ways_of_Token_Burning\" title=\"What are the different ways of Token Burning?\">What are the different ways of Token Burning?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/zebpay.com\/in\/blog\/what-is-token-burn\/#Which_Tokens_have_been_burnt_in_the_past\" title=\"Which Tokens have been burnt in the past?\">Which Tokens have been burnt in the past?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n\n<p>Crypto tokens are of various kinds. Some have a finite supply and are synonymous with commodities like gold, for example, Bitcoin. Others like Ethereum have an infinite supply and enable Smart contracts. No matter what the nature of the token is, the availability of a token is a determining factor of the token value. This is where token burning comes into the picture. In this blog let us deep dive into what Token burning is and let\u2019s discuss its merits and demerits.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_a_Token_Burn\"><\/span>What is a Token Burn?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The law of supply and demand is one of the most important axioms of economics. It states that the price of an asset is determined by supply and demand. Token burning is a technique used to increase the price of a crypto asset by controlling the supply. It involves sending crypto tokens to a wallet which does not have private keys. This wallet can only receive crypto. When tokens are sent to this wallet address they essentially become inaccessible. With the supply being reduced and the demand remaining constant, the price of the asset increases.&nbsp;<\/p>\n\n\n\n<p>Read more: <a href=\"https:\/\/zebpay.com\/in\/blog\/what-is-a-crypto-wallet\" target=\"_blank\" rel=\"noreferrer noopener\">What Is A Crypto Wallet<\/a><\/p>\n\n\n\n<p>Token burning is a community effort. When a community of holders burn a small number of tokens individually, it together becomes a large amount thereby positively impacting the price.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_Does_Token_Burn_Work\"><\/span>How Does Token Burn Work?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>It is important to note that Tokens once burned are lost forever. Any user who wishes to burn tokens must double-check the amount being burnt and ensure that the tokens are being sent to a wallet without <a href=\"https:\/\/zebpay.com\/in\/blog\/what-is-a-private-key\" target=\"_blank\" rel=\"noreferrer noopener\">private keys<\/a>. With that said let us dive into how Token burning works.<\/p>\n\n\n\n<p>The central part of a token burning process is the Proof of Burn (POB) consensus mechanism. It verifies and validates each burn transaction and these transactions can be checked using the blockchain explorer. Similar to other consensus mechanisms, it is used to ensure there is no double spending or fraudulent transactions. It also allows miners to mine new coins as several miners are required to burn coins first to mine them.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Process_of_Token_Burn\"><\/span>Process of Token Burn<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img decoding=\"async\" width=\"1024\" height=\"384\" src=\"https:\/\/zebpay.com\/in\/wp-content\/uploads\/2022\/12\/Process-of-Token-Burn-1024x384.jpg\" alt=\"Process of Token Burn\" class=\"wp-image-21324\" srcset=\"https:\/\/zebpay.com\/in\/wp-content\/uploads\/2022\/12\/Process-of-Token-Burn-1024x384.jpg 1024w, https:\/\/zebpay.com\/in\/wp-content\/uploads\/2022\/12\/Process-of-Token-Burn-300x113.jpg 300w, https:\/\/zebpay.com\/in\/wp-content\/uploads\/2022\/12\/Process-of-Token-Burn-768x288.jpg 768w, https:\/\/zebpay.com\/in\/wp-content\/uploads\/2022\/12\/Process-of-Token-Burn-150x56.jpg 150w, https:\/\/zebpay.com\/in\/wp-content\/uploads\/2022\/12\/Process-of-Token-Burn.jpg 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure><\/div>\n\n\n<p><\/p>\n\n\n\n<p>There are essentially two ways to burn tokens. Some ecosystems like the Binance coin have a burn function feature which is available to users. Users can avail this feature to burn their Binance Coins. <a href=\"https:\/\/zebpay.com\/in\/blog\/smart-contracts-on-the-blockchain\" target=\"_blank\" rel=\"noreferrer noopener\">Smart contracts<\/a> check if the user has the required tokens to burn. These tokens are subtracted from the available tokens and are permanently destroyed.<\/p>\n\n\n\n<p>The second and the most widely used way is to simply send tokens to a wallet without private keys. This cuts off the burnt tokens from circulation. Though the tokens are not \u201cdestroyed\u201d in this case, they can never be retrieved either.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Examples_of_Token_Burning\"><\/span>Examples of Token Burning<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The technique of burning crypto has been used for multiple tokens. For example, Over 4 million bitcoins are estimated to have been lost or burned. Several other tokens such as Shiba Inu and Ethereum have also been burned.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"BNB\"><\/span>BNB<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Binance has an automated burn feature where a certain amount of tokens are burnt every quarter. The 21st BNB burn took place on October 13th,2022. The total number of BNB burned was 2,065,152.42 which was worth $574,800,583.92 at the time of burning. The transaction can be viewed <a href=\"https:\/\/explorer.bnbchain.org\/tx\/5C6C88892AB98D820173DF6F784F76DDABCA32A06546C132514E663E66699794\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">here<\/a>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Ethereum\"><\/span>Ethereum<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Ethereum\u2019s transaction fee-burning mechanism removed 1.3 million ETH from the network\u2019s circulation back in 2021. This was part of the EIP-1559 protocol which took the Ethereum network a step closer to <a href=\"https:\/\/zebpay.com\/in\/blog\/what-is-the-ethereum-merge\" target=\"_blank\" rel=\"noreferrer noopener\">Ethereum Merge<\/a>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Shiba_Inu\"><\/span>Shiba Inu<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Shiba Inu\u2019s burn portal was introduced in 2022 which gives a chance for the community to burn tokens and let the token\u2019s price react positively. Previously the SHIB community sent 50% of the entire coin supply to Vitalik Buterin who burnt close to 90% of the tokens which he received.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Pros_and_Cons_of_Token_Burning\"><\/span>Pros and Cons of Token Burning<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Pros\"><\/span>Pros<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Maintaining_the_price\"><\/span>Maintaining the price<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Supply being removed from circulation can send the price of the token upward. This can help the investors accrue more wealth<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Building_a_robust_community\"><\/span>Building a robust community<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Deflationary assets become rare over time. This makes it difficult for one to get a hold of these assets. The lack of supply always drives the community to show more interest in acquiring tokens.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Cons\"><\/span>Cons<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Lost_opportunities\"><\/span>Lost opportunities<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Tokens burnt are lost forever. If a user decides to burn crypto tokens he\/she should be prepared for the outcome that the price of the coin could increase in future.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"A_large_number_of_tokens_are_needed_to_make_an_impact\"><\/span>A large number of tokens are needed to make an impact<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>For example, approximately 500 trillion Shiba Inu tokens worth $ 7 billion were burnt by Vitalik Buterin during Shiba Inu\u2019s token burning process.<\/p>\n\n\n\n<p>Read more: <a href=\"https:\/\/zebpay.com\/in\/blog\/what-is-coin-burning\" target=\"_blank\" rel=\"noreferrer noopener\">What Is Coin Burning<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Token burn is a unique way to increase the price of a crypto asset. It works on the fundamental principle of the law of supply and demand. While there is no guarantee that Token burning will surely increase the price, one should always do a thorough analysis of previous burns made while considering burning a specific token. Users should exercise caution while sending tokens to addresses without private keys as once a token is burnt, it is lost forever.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs_on_Token_Burning\"><\/span>FAQs on Token Burning<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div id=\"rank-math-faq\" class=\"rank-math-block\">\n<div class=\"rank-math-list \">\n<div id=\"faq-question-1672129069778\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"What_is_Token_Burn\"><\/span>What is Token Burn?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Token burning is a technique used to increase the price of a crypto asset by controlling the supply. It involves sending crypto tokens to a wallet which does not have private keys. When tokens are sent to this wallet address they essentially become inaccessible. With the supply being reduced and the demand remaining constant, the price of the asset increases.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1672129222284\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"What_are_the_different_ways_of_Token_Burning\"><\/span>What are the different ways of Token Burning?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>There are essentially two ways to burn tokens. Some ecosystems like the Binance coin have a burn function feature which is available to users. Users can avail this feature to burn their Binance Coins. The second and the most widely used way is to simply send tokens to a wallet without private keys.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1672129272094\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"Which_Tokens_have_been_burnt_in_the_past\"><\/span>Which Tokens have been burnt in the past?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>There are many crypto tokens which have been burnt in the past. Some of the notable names include Bitcoin, Ethereum, BNB and Shiba Inu.<br \/>\u00a0<br \/>Experience the power of crypto trading with <a href=\"https:\/\/zebpay.com\/in\" target=\"_blank\" rel=\"noreferrer noopener\">ZebPay<\/a>.<\/p>\n\n<\/div>\n<\/div>\n<\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>Crypto tokens are of various kinds. Some have a finite supply and are synonymous with commodities like gold, for example, Bitcoin. Others like Ethereum have an infinite supply and enable Smart contracts. No matter what the nature of the token is, the availability of a token is a determining factor of the token value. This [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":21325,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_ayudawp_aiss_exclude":false,"footnotes":""},"categories":[14],"tags":[16],"acf":[],"_links":{"self":[{"href":"https:\/\/zebpay.com\/in\/wp-json\/wp\/v2\/posts\/21320"}],"collection":[{"href":"https:\/\/zebpay.com\/in\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zebpay.com\/in\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zebpay.com\/in\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/zebpay.com\/in\/wp-json\/wp\/v2\/comments?post=21320"}],"version-history":[{"count":0,"href":"https:\/\/zebpay.com\/in\/wp-json\/wp\/v2\/posts\/21320\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zebpay.com\/in\/wp-json\/wp\/v2\/media\/21325"}],"wp:attachment":[{"href":"https:\/\/zebpay.com\/in\/wp-json\/wp\/v2\/media?parent=21320"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zebpay.com\/in\/wp-json\/wp\/v2\/categories?post=21320"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zebpay.com\/in\/wp-json\/wp\/v2\/tags?post=21320"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}