Burning
In short: Burning is the destruction of tokens to reduce supply. Tokens are either sent to a burn address that no one can spend from or removed by a smart contract…
Burning is the destruction of tokens to reduce supply. Tokens are either sent to a burn address that no one can spend from or removed by a smart contract function, so they can never circulate again.
Why it matters
Burning is a common tokenomics tool: projects use it to offset new issuance, to remove unsold tokens after a sale or to link supply to network activity. Ethereum, for example, burns the base fee portion of every transaction fee, and stablecoin issuers often burn tokens when users redeem them for cash. Because burns are recorded on-chain, anyone can verify them with a block explorer. A burn reduces supply, but it does not by itself set a token’s price, because demand matters just as much.
Example
A project that holds a treasury of its own token announces a burn. It sends a set amount of tokens to a well-known burn address and publishes the transaction ID. Anyone can open a block explorer, confirm that the tokens reached that address, and see that they now sit there permanently, outside the circulating supply. If the token’s contract has a dedicated burn function, the recorded total supply shrinks as well.