What is a token burn?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 4 min
In short
Burning removes tokens from circulation by putting them permanently out of reach — sending them to an unspendable address, or calling a burn function that reduces total supply. The supply reduction is a fact; what it leads to depends entirely on the demand side.
Key points
- Puts tokens permanently beyond use, removing them from supply
- Done by sending to a burn address or calling a burn function
- Every burn is publicly verifiable on chain
- Some designs burn a share of fees automatically
Definition
Removing tokens from circulation by making them unmovable — either by sending them to an address with no known private key, or by calling a contract function that reduces the balance and total supply.
The simplest method is sending tokens to an address with no private key, such as the zero address. Nobody can move them again, so they leave circulation in practice — though the recorded total supply does not change. Most explorers subtract burn-address balances when showing circulating supply.
Where the contract exposes a burn function, both the balance and the total supply are reduced. ERC-20 implementations often include one, and in that case the reported total supply really does fall.
Ethereum's EIP-1559 is the automated case: the base fee portion of each transaction fee is burned outright, so supply shrinks with network usage. Nobody decides to do it — it is simply part of the protocol.
Watch out for
- · Reduced supply and what happens to price are separate questions — the link is not automatic
- · Verify any burn on chain rather than relying on the announcement
- · Tokens you send to a burn address by mistake cannot be recovered