Burning anything of value actually seems very illogical; But you should know that token burning is a very common and popular practice in the cryptocurrency market that big companies do. For example, the big and international exchange Binance burned 400 million dollars of BNB tokens in its 16th big token burning. Token burning has many benefits for investors, which we will discuss below.
When it comes to token burning, there are many people who associate fire in their mind. But you should know that cryptocurrencies are digital in nature and burning them is a little different from burning other assets. In this action, large companies burn part of the tokens during a complex operation to prevent the price of their token from falling or even increasing its price.
Token burning can be done in different ways, which are as follows:
At the beginning of the article, we told you that big companies do token burning to prevent price reduction or to increase the price of their token. In this part of the article, we are going to tell you about the biggest token burns in the history of cryptocurrency.
One of the biggest token burnings in this field is related to the Binance exchange token, which is done every three months. In its latest token burning, this exchange burned 1,296,000 units of its token worth 400 million dollars in July 2021. Elite, you should know that BNB currency is no longer considered a token since Binance's exclusive blockchain was launched and is now included in the category of coins.
One of the best and most potential digital currencies on the market is XRP. Ripple uses the second method for its token burning. In this way, it removes the XRPs it receives for the transaction from the transaction flow. With this, over time, the amount of circulating Ripple tokens will decrease and price fluctuations in this currency will decrease.
It is interesting to know that Ripple is the sixth currency in terms of market value, which despite the lawsuit with the American Securities and Exchange Organization, managed to experience a very good price growth.
(XLM) Stellar Token (XLM)
The Stellar company conducted its largest token burn in 2019, where it burned 55 million Stellar tokens. This was done to increase the price of Stellar. It is interesting to know that the burned tokens at that time had a price equivalent to 4.7 billion dollars. The features of Stellar currency include very low fees and very high transaction speed in this currency.
The name of this project is derived from the name of the creator of Bitcoin. This token was the first project that could be launched based on the proof-of-fuel protocol on Binance's proprietary blockchain. The total amount of Satoshi tokens, just like Bitcoin, is equal to 21 million, of which about 50% have already been burned. It is interesting to know that every 10 minutes, 50 Satoshis (the name of Satoshi company's token currency) are produced.
The generated tokens are distributed fairly among the people who participated in the token burning. That is, if a million tokens have been burned in this network, a person who has burned 1000 tokens can receive ten percent of the mined tokens.
According to reliable people, the decentralized exchange Sheba Swap will be equipped with a new portal for burning tokens. You can burn your Shibai tokens through this portal and receive an annual profit of 43.76%. Shiba's development team believes that the token burning of this meme coin can greatly help to increase the assets of the Shiba community.
The most important advantage of token burning is the increase in the price of the token. For example, when Stellar did its token burn, the value of this token grew by more than 25% at that time. Token burning is actually a gift given by companies to investors. When the news about the token burning of a project is published, you can get profit from the growth of that token by investing in it.
Many companies issue a large number of tokens during their IPO. This action can destroy the balance between supply and demand. Therefore, another benefit of token burning in this situation is increasing the balance between supply and demand. This can increase investors' peace of mind.
Coins use their own blockchain network and can be considered like the owner of a house. Like Bitcoin, which uses Bitcoin's dedicated network to process its transactions. But tokens are like tenants who do not have their own network and are launched on the network of other projects. One of the most famous and popular of these networks is the Ethereum network.
In this article, we tried to tell you all the necessary tips about token burning. You can see the projects that are going to burn tokens on a certain date as an investment. Of course, this point is not an investment proposal and you should do the necessary analysis and research in this field yourself.
