The process of permanently removing cryptocurrencies from circulation in order to lower the overall quantity of the currency is referred to as “coin burning.” In other words, the coins have been destroyed and cannot be used for trade or anything else.
Currency burning intends to generate a deflationary impact and perhaps boost the crypto’s worth to benefit its holders by making the coin scarcer. The purpose of coin-burning events is to steadily lower their total supply.
While there are several methods for burning cryptocurrency, some projects have a specialised burning capability as part of their protocol.
Coin burning has become increasingly widespread in the blockchain realm with the emergence of Decentralized Finance (DeFi) protocols. After deploying the London hard fork update in 2021, Ethereum (ETH) began burning the ETH base fee for all blockchain transactions.
To burn coins, a particular quantity of cryptocurrency is given to a smart contract or wallet address that cannot be used for transactions and does not include private keys. This implies that once the coins reach the address, they are permanently lost and hence eliminated from the available supply.
