What it is
Mint and burn is a supply control mechanism common to many stablecoins, particularly fiat-backed ones. When a user sends fiat currency to a stablecoin issuer, the issuer "mints" an equivalent amount of new stablecoins, increasing the total supply. Conversely, when a user redeems stablecoins for fiat currency, the issuer "burns" the returned stablecoins, permanently removing them from circulation and decreasing the total supply.
This process directly influences the circulating supply of a stablecoin, aiming to keep its value pegged to its underlying asset. For instance, if demand for a stablecoin increases, more tokens are minted, expanding supply to meet demand without affecting price. If demand falls, tokens are burned through redemptions, reducing supply. This dynamic is central to how stablecoin issuers manage liquidity and maintain the stablecoin's peg.
Why it matters
This mechanism ensures stablecoins maintain their pegs by adjusting supply to meet demand, directly impacting their price stability and reliability.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice