Burn Rate

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Pronunciation

[burn rayt]

Analogy

Burn rate is like the rate at which a candle’s wax is consumed—the faster the , the quicker the supply diminishes.

Definition

The rate at which tokens are permanently removed from circulation, often via smart‑contract `burn` functions.

Key Points Intro

Burn rate affects scarcity via:

Key Points

Token burns: Calls to `burn()` reduce `totalSupply`.

Fee burns: Portion of transaction fees automatically burned.

Scheduled burns: Periodic or event‑driven removals.

Deflationary pressure: High burn rates can increase token value.

Example

A DEX burns 50% of its monthly, removing 10 000 tokens from supply.

Technical Deep Dive

functions transfer tokens to the zero (`0x000…dead`) or call internal `_burn()`. Contracts may implement `burnOnTransfer` hook: `uint burnAmt = amount * burnRate / 10000; _burn(sender, burnAmt); _transfer(sender, recipient, amount - burnAmt);`

Security Warning

Excessive burning can reduce liquidity and hamper network operations reliant on .

Caveat

Burned tokens are irreversible; mis‑burn logic can permanently lock user funds.

Related Terms

Mint and Burn Mechanism

Token Velocity

Emission Curve

Blockchain & Cryptocurrency Glossary

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