What it is
A token burn is a process where a specific amount of cryptocurrency tokens are permanently taken out of circulation, effectively destroying them. This is usually achieved by sending the tokens to a "burner address" or "eater address" that has no known private key, making them irretrievable and unspendable. Token burns are often implemented to reduce the total or circulating supply of a cryptocurrency.
Projects conduct token burns for various reasons, including to increase scarcity, stabilize prices, or fund development. For Ethereum, the EIP-1559 upgrade introduced a base fee for transactions that is automatically burned, rather than going to miners, which reduces the circulating supply of Ether. This mechanism can make Ether deflationary under certain network conditions, impacting its supply dynamics.
Why it matters
Token burns reduce supply, potentially increasing scarcity and value, and are a key mechanism for managing a cryptocurrency's economics, like Ethereum's.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice