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Token burn Meaning

A token burn is a mechanism by which tokens are permanently removed from circulation, reducing total or circulating supply. Burns are typically executed by sending tokens to an irrecoverable address, making them unusable forever.

Token burns are often used to counter inflation, redistribute value to holders, or align supply with protocol usage. Common burn models include fee-based burns, scheduled burns, or burns tied to revenue generation.

By reducing supply, burns may increase scarcity and support long-term valuation. From a market perspective, the effectiveness of token burns depends on scale, transparency, and consistency.

Institutions assess burns not as isolated events, but as part of a broader monetary policy governing issuance, incentives, and demand drivers.

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