What is a token burn? Why crypto projects destroy coins
By SendPay Business · · 2 min read
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A token burn is when crypto coins or tokens are permanently removed from circulation. They are sent to a burn address, a wallet with no known private key, so nobody can ever spend them again.
Why projects burn tokens
- To reduce the total supply over time.
- To show commitment, for example by burning unsold tokens after a sale.
- As part of how the network works, such as burning a share of each fee.
Ethereum's fee burn
Since the London upgrade in August 2021, Ethereum burns the base fee part of every transaction fee. When the network is busy, more ETH is burned, which offsets some of the new ETH created as rewards.
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Does a burn raise the price?
Not necessarily. A smaller supply only helps the price if demand holds up. Some burns are small compared with total supply, and some projects announce burns mainly for publicity. Look at how much is burned, how often, and why.
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Questions people ask
How do burns change a token's supply?
Work out the supply after burns and new issuance.
Token burn calculator →What is a coin's market cap?
Work out market cap from price and supply.
Crypto market cap calculator →Read next
Spotted a mistake or something out of date? and we'll fix it. How our guides are made
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. Other companies named in this guide are reference points only and are not affiliated with SendPay Business.