Acquiring assets with great quality or price tag attached to it, is the common mindset of everyone that is striving to become rich. People loves holding on to things with great value, possessing them in large amount.
Or is their a better scheme than that ?.
When a new coin is set to be release, we often see people going for it in large amount, either by buying, or claiming it as an airdrop package. The prices of this new token usually drops(dump) after few minutes of release, which can be slightly related to how much of it was in circulation.
Over the years, this burning technic has being used for different token, as it has greatly helped the crypto market to surviving till this date.
Similarly to the normal fiat, but fiat sometimes are being changed by replacing it with new notes, for the easy withdrawer of the old notes from the economy.
Photos by Shubzweb3 On Unslash
Recently, we saw binance in action, performing some burning activities on LUNC tokens. It was reported that 2.65 billion Terra Classic (LUNC) where burned, increasing the total number of tokens being burned by Binance to exceed 35.5 billion mark. After the burned, the price seems to increase by 3%, which is now currently trading at a price fee of $0.000086.
Reasons For Burning Tokens
Generally, the crypto verse has come to a conclusion(belief), that excess supply of tokens in circulation, tends to decrease the price of that particular token, by reducing its value.
This fall in price can stay for a very long time, without even experiencing great change during the bull market.
Burning of tokens might sound strange to some new crypto users.
Thinking if it is actually setting a token ablaze ?.
From the highlight context above, the answer is no. Burning a token is simply creating a wallet address, that only receives the token, and not send out any, thereby sending large amount of the token to the wallet address. We should note that transaction fees are also attached to this process, because it is not free.
My Opinion
I think more tokens that are currently in the market, needs same procedure, due to their low rating and excess in circulation.
In Conclusion
Burning tokens is not such a bad idea, since it helps the market and the tokens in discussion. I guess this is a better way of giving this crypto asset a better price value.
Thanks for reading, and share your opinion in the comment section below
This is my first post for the month of july, so i am wishing everyone a happy new month 🤗.