- It is an act of removing tokens/coins from the circulation-There is no actual burning of digital assets, it is just the way of saying it-The burning of tokens/coins is all done on the blockchain and that is visible for the public.
HOW IS IT DONE?
-Usually the tokens are sent to an address from which it can never be accessed.-The address of a digital wallet in this case-That place is a no man’s land ( there is nobody who can access that wallet)-The tokens will remain untouched forever
WHY IS IT DONE?
-It is one of those strategies to reduce the supply and make the tokens scarce-Reducing the supply is usually related to the surge in the overall price-Might not be an immediate effect on the price but it makes the asset deflationary
-Usually projects announce the burn events quite in advance and is priced-in sometimes-It is equivalent to “buying back shares” in general