Crypto burning: why do projects destroy their coins?

In short: burning is the sending of coins to an address without access. It sounds strange, but it works like a promotional bail-out: you reduce the number of coins → the scarcity increases → the price goes up.

Why do projects do this?

1. Create a deficit = raise the price Elementary economics: less supply with rising demand = price skyrockets. That's the whole secret.

2. Kill inflation If coins are printed without stopping, they will become like the Venezuelan bolívar. Burning is a way to regulate issuance and maintain value in the long term.

3. Save the dead project Is the project in the red? Announce a bail-out — and boom! Attention traders, the volume is increasing, attracting new investors. Like an AD for the coin.

4. Protect decentralization The retained commission coins are burned — and the team does not concentrate power. A more honest distribution.

Real Examples

Serum (SRM): in May 2021 burned $1.03 million coins, plus stakers received $257k as rewards. Tactic: constant burnings to keep the supply in check.

Shiba Inu (SHIB): in May 2023, 3.03 billion coins were burned in one day. The community is taking control into its own hands.

How does it work technically?

The project writes a smart contract that:

1. Checks for the presence of coins in the treasury
2. Sends them to a random address
3. The address is “dead” — the keys do not exist
4. Coins disappear forever from circulation

Everything is visible on the blockchain — complete transparency.

Real impact on price

✅ Pros:

• Investor trust is growing (the team is thinking about the long term)
• Attracts speculators → volumes and liquidity
• Reduces inflation → stability
• May open partnerships and collaborations

⚠️ Cons:

• Frequent burnings may seem like a panacea for problems
• Volatility and uncertainty can be invoked
• If this becomes the main strategy, the project loses trust.
• Funding rounds may be affected

Advice to Investors

Burning is not a panacea. Yes, it can raise the price in the short term, but look at the fundamentals: does the project have a real product? Is the audience growing? Or is burning just a facade to cover up problems?

Add burning to the list of analysis factors, but do not make it the main criterion for position selection.