A token burn is when tokensTokenA digital asset created with a smart contract on another cryptocurrency's blockchain, rather than on a blockchain of its own. or coins are permanently removed from circulation. The most common way is to send them to an address that nobody has the private keyPrivate keyA secret number that proves you own the crypto in your wallet. Whoever holds the private key controls the crypto. for, so nobody can ever move them. Sometimes a smart contractSmart contractA program that runs on a blockchain and automatically carries out what it was written to do once certain conditions are met. destroys the units directly. The burn is visible on the blockchain, and anyone can verify it.
Think of locking banknotes in a safe and throwing the key into the sea. The notes still exist, but nobody can ever use them again.
Why burn tokens?
- To reduce supply. If demand stays the same while supply shrinks, that can support the price. This is why burns are often part of a project's tokenomics.
- As part of fees. On Ethereum, the base feeBase fee and priority feeThe two parts of a transaction fee on Ethereum. The network sets the base fee, which is burned, while the priority fee goes to the validator. of every transaction is burned, and has been since August 2021. On Solana, half of the base fee is destroyed.
- Buybacks. Some projects use their revenue to buy their own tokens on the market and burn them. On Hyperliquid, for example, part of the trading fees automatically goes into buying HYPE, which is then burned.
- To give up power. In May 2021, Vitalik Buterin, one of Ethereum's founders, burned more than 410 trillion SHIB, about 41% of the entire supply of Shiba InuShiba Inu (SHIB)A memecoin token on the Ethereum network from 2020, named after the same dog breed that features in Dogecoin's logo.. He said he didn't want the power that came with such a large holding.
What to keep in mind
A burn on its own doesn't make a cryptocurrency more valuable. If the supply is enormous, a small burn makes little difference, and burn announcements are sometimes used to create hype. What matters is how much is burned compared with how much is added, and whether anyone actually wants to use the token.
Burns also affect how supply is counted. Burned tokens usually aren't counted in the circulating supply, even though they are still recorded on the blockchain.
Everything in Myntkaup Learn is written and regularly reviewed by the Myntkaup editorial team. It is for education and is not investment advice. Editorial policy. Updated 2 November 2026.