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Hello everyone, how are you all doing?, I welcome you again to the steemit engagement challenge, here we are in season 5 week 4 which is the last week of the season, and I shall be joining the discussion: "Token Burn".

The Token Burning we are referring to here is the Burning of a cryptocurrency token, this is not a physical burn that we are all familiar with, but it is a burn that occurs to destroy a coin to reduce the circulating supply of the particular asset, I shall dive into the article, Happy Reading!!

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Use your own words to determine what is the token burn. and explain how it works (if possible add an illustration for it)?

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Token Burn:

Token burn is a protocol that occurs in the cryptocurrency realm, this idea was to reduce the circulating supply of a crypto token, whereby it is done in such a way that a null address is created, this null address is only capable of receiving crypto coin and not capable of sending it out, thus the crypto is sent to this null address to nullify their existence in the blockchain.

The main purpose of cryptocurrency burn is to reduce the circulating supply of particular assets, as we know that the market and price of cryptos are determined based on the law of supply and demand, if there is an excess amount of supply with little demand, the coin could have a little value, but when the demand is high, and the supply is low, this will cause scarcity, and drive the price of the token to be high.

How Token Burn Works:

Token burn works in a way that the blockchain of the said crypto creates a null address, this null address is not recorded on the blockchain, which means whatever assets are being sent to the address no longer have a record or value on the network.

The illustration is the #burnsteem25 innovation on the steemit platform, when users are required to send 25% of their earnings to the @null account, this means the 25% payout automatically burns, and this nullifies the amount of whatever steem is being burnt.

And as well, there are other ways of burning tokens, there are some decentralized platforms that required the burning of tokens before you can make a post, like, or comment, all these are great ideas to reduce the circulating supply of the assets, we should have in mind that, Circulation reduction is the major insight of Token burn.

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List the benefits of token burning with a detailed explanation of each

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Token burn is primarily done to keep a project active and capable, when a cryptos platform is losing its advantage or there's a huge FUD in a project, the token burn has always been a way to go, there is some instance where projects intentionally burn 1/4 of there circulatory supply to keep them from Rug pulling.

Circulation Supply Reduction: - This is one of the major reason tokens are being burnt, when token burns were introduced as I had said earlier, some amount of the coin are being sent to the Null address, and the Null address no longer have the record of these token being burnt, whereby there are no longer existing and Not Available to trade.

Increase Demand and Reduce Supply - When the supply is Low, the Demand is High, this is purely a business insight, people love things they can't easily get, token burn is a way to stop the flow of coins, then make it very difficult to get in the market, when the Demands increases and there is little supply, people tend to want to own the particular assets, then as time goes by, the coin gets to increase in price.

Attraction Of Investment - All these points are still based on the Reduction supply, investors love the idea of a serious project, Token burning is another way to attract investors, and assurance of safety in their assets, when circulation reduces, then only a few people will be trading the assets which this brings a little stability to the coin.

Reduce Market Volatility - When the circulation supply is low, there gets to be stability in the price of an asset for a while before an uptrend, token burning reduces the selling pressure, since there is not enough circulation to go around, then there get to be little volatility in the price of the particular asset.

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Why does the blockchain burn its tokens? Study the case of a blockchain that burned its tokens by identifying the results obtained

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Blockchain Burn their token for two purposes, which are;

• To Reduce the Circulation Supply.

• To Maintain Stability in the Price of Asset.

When Crypto projects are no longer as active or differing from their main purpose, people tend to start cashing out their profit and causing excessive circulation in the price of the assets, token burn is introduced in this aspect to reduce the amount of the coin in the circulatory and also reduced the market supply when the supply is down, then there could stability in the price of the assets.

Blockchain also burn its token to maintain a certain price in the amount, we have seen some crypto platforms that intentionally purchase some amount of their coin, then this amount is sent to the null address to remove the existence of the particular coin in circulation, then this would eventually cause a spike in the said amount of the coun in existence or at least maintain the price rather than causing the coin several lows.

An example of this is seen from the QRDO Network, where the blockchain is committed to burning 100m of its token in the year 2022, this innovation was introduced when the coin is largely losing its potential and there are lots of several lows, thus is casuignFUD and Fear among investors.

It was then that Network now concluded burning 14% of its initial token, this was augmented in their Roadmap, and ever since the burn occurred, there has been little stability in the price of the coin, despite that they are still struggling with the price, but there has been a great effect of the burn because hardly been the Network decides to sit back and relax, the project could have been ruined, but the burning was effective as it has to keep calm the selling pressure of the coin. Information Regarding this could be gotten from Qredo Website

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The Result

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The First burn happened in March 2022 when 40M Qredo were being sent to the Null address, Before the Burn, the token is getting lots of selling pressure at $2.8, and the price drastically reduced from $7 to $2 within January alone, the project foresaw FUD coming, which was when the 100M QRDO burn was introduced, and ever since we have seen price stability in the coin as it is currently maintaining $0.22, causing the price to be stable rather than seeing new lows.

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The burnsteem25 company that encourages burning 25% of your publishing revenue? Do you think it will help boost the value of steem currency in the medium term?

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MY View On Burnsteem25

The Burnsteem25 is a recent idea adopted on the platform where users are being required(Optional) to set 25% of their payout to the null account, just like I had said that the null account is meant for burning of steem token, whereby any token sent to the address is nullified and no longer exist, and this automatically reduces the amount of steem circulating supply.

Yes!! , this idea has been a great one, and I could say it is a perfect idea the Steem blockchain needs at the moment, as this has greatly reduced the selling pressure of the Steem token, ever since the burnsteem25, we have seen stability in the price of steem since the previous month, even thou the change is not as significant due to more large number of users not following the idea, but still, it has rather reduce the circulation causing the price of steem to be stable rather than picking new lows.

Its no doubt that the idea will boost the revenue of steem, its probably a long-term scenario, it's a change that we might not see its effectiveness now, but I'm certain in 6 months when all users on the platform are committed to this idea, we get to see more highs in the price of steem, and this will rather reduce the supply of steem and causes the demand to be high.

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Conclusion

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Here comes my conclusion on the topic: Token Burn, where I have explained token burn being the idea of burning some token, in this case, the token is being sent to a null address, the null address is inaccessible, and it's not capable of sending out a coin, whatever coin sent to the address is automatically burnt and no longer exist.

The token burn was implemented to reduce the circulation supply of the crypto asset, and also to prevent a project from FUD, where in this case, the circulation supply reduces, then the project could eventually catch up with high demand.

Thank you everyone for following up, I hope to see you all in the coming season as well. Goodluck!!.