GlossaryBeginner
Token Burn
Permanently removing tokens from circulating supply, generally by sending them to an address no one controls.
A token burn permanently removes tokens from circulating supply, typically by sending them to a wallet address no one holds the private key for, making them permanently unspendable and effectively destroyed.
A burn can happen for several different reasons — as part of a buyback-and-burn program (see Kaavon's "Buyback and Burn" glossary definition), as a transaction-fee mechanism that burns a portion of every fee (as Ethereum's EIP-1559 does), or as a one-time supply adjustment — and reduces total supply regardless of the specific reason behind it.
Examples
- A portion of every Ethereum transaction's base fee is permanently burned under EIP-1559, continuously reducing supply as the network is used.
- A token burn is verifiable on-chain, since the burned tokens' destination address can be checked to confirm it has no known private key.