Token burn

Assalamualaikum

Greetings 🤗
Token burn definition its reasons behind its implementation and many more today I am going to discuss.

Token burn is defined as permanent removing particular number of tokens from the circulation in market and the process is called token burn and this is done in a way of sending them to a specified and designated address which is most often used burn address where they eliminate from the market circulation and becomes in accessible by everyone and unspendable which cannot be spend and cannot traded.

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There could be different purposes behind the process of token burn and it may changes from project to project or according to the Crypto currency which is involved behind the process of token burn so there could be some reasons that we can keep in mind behind the implementation of token burn.

1	Supply Reduction	Token burn could begin for the reduction in the supply of particular tokens from the circulation and market because when supplier of a particular token degrees then scarcity of the token that remaining in the circulation could increase their values that's why it becomes more beneficial for investors and project both to take benefit of the remaining tokens because demand of tokens increase in this way.

2	Inflation Control	We can control inflation by the implementation of process of token burn in the cryptocurrency ecosystem because by the reduction in the supply of particular tokens the background purpose for a particular project is to help in the maintenance of secure inflation rate and that's why it helps to preserve the value of tokens with the passage of time.

3	Reward Mechanism	People who hold token of a specific ecosystem can also use token burn mechanism and process to be used as a reward mechanism and if I give an example then we can say that there is a project who can allocate a little part of its revenue to buy back and burn tokens so in this example it is effectively again distributing the value to the existing token holders.

4	Network Security	We all know that network or blockchain integrity and security is very vital so token burn can also play a significant role in it in the enhancement of security of blockchain network because by the burning of tokens project main purpose would be in the reduction of the malicious actors that are accumulating the significant amount of tokens and trying to take over the control of network consensus and overall blockchain.

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Token burn every time don't mean that tokens are going to destroyed physically or going to deleted because instant of this they are restricted means rendered unspendable means cannot be spend and accessible means everyone cannot approach them in a more easy way so they are effectively moved from the circulation in which they can become easily accessible to everyone.

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When I talk about token burn execution then these are executed by protocol level mechanism or small contract we can also consider so in this way token burn gives surety of transparency and immutability. After that when I talk about number of tokens that are burning and frequency of burning events that how much time burning event occurs then these are determined by the governance of a particular project or cryptocurrency and according to the rules that are preplanned and most appropriately predefined.

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If I summarize my all about discussion then I can say that it is a strategy and useful process that is used by the different projects of cryptocurrency for the achievement of reduction in their supply controlling the inflation rate as well as regarding token holders and for the enhancement of security of a blockchain so by removing to comes from circulation over all token economy effects a lot definitely and it also influence the value of remaining tokens in the positive way that are still available in the circulation after this happening.

Have a nice day