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What is a Token burn?

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A Token burn is the destruction of a certain amount of Tokens or Coins to reduce the number of coins in circulation. The main objective of putting Token burn into practice is to support an asset price growth and value increase, and this method is successfully applied by Crypto projects, traditional businesses, and even global corporations. The public record of this process is called Proof-Of-Burn.

On the whole Token burn is a deflationary measure helping to increase the token value and to retain the confidence of the token holders. This strategy not only reduces the total supply but also increases the market value of tokens. Usually, when a company burns tokens or blocks a certain number of tokens, it causes the price to increase due to the low supply and demand. Token burn is also used to maintain stability and minimize the fall in the price of a token.

Token burning is done by sending the selected number of coins to an address that cannot be accessed by anyone; many crypto projects like Binance, Ripple, Stellar follow this practice. It can be said with certainty that this approach is beneficial because it will bring considerable benefits in the long run. Any token project consumes a certain amount of currency to artificially maintain the asset price at the required level, thereby preventing the devaluation of coins that are not used for a long time.

If this strategy is ignored, the cost of the number of tokens is often zero, and the project will be unprofitable. Burning usually does not result in an immediate increase in the asset value because it often destroys coins that have not been in circulation for a long time. However, as the demand for coins increases over time, it can increase considerable growth, and updates from previous highs can be achieved faster.

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