What (and Why) Token Burning?
Token burning is the process of removing coins from circulation permanently, thus reducing the total supply. The development team for a particular cryptocurrency asset typically performs token burning. This can be accomplished in a variety of ways, the most common being through the use of a so-called "eater address" or "dead address." Although its current balance is visible on the blockchain, no one has access to its contents.
There are several benefits of a coin burn and they are as follows:
- Increase in the value of the token
This is perhaps the most well-known advantage of coin burning. Coin burn reduces the token's overall circulation, thereby reducing the token's overall supply. This could result in an increase in the token's value. The constant burning of the coin contributes to the coin's stability in value.
- A steady value of the token
Constant token burning helps maintain the token's value and also hedges against a long-term price increase. Coin burns have the potential to increase the value of the holder's token relative to its pre-burn value.
How Does Token Burning at KuSwap Work?
Burning may involve the developers of the project repurchasing tokens from the market or burning a portion of the supply already available to them. We have implemented a couple of deflationary mechanisms.
- All the unclaimed rewards from KuDrops are used for KUS token burning.
- 50% of the AMM fees are used for buying the KUS tokens back from the market and burning them.
- 50% of the fees from KusPad and upcoming Lending & NFT marketplace
- 50% of the farming fees will be used to burn in the future
- 3% of every prediction markets round soon will be used to buy KUS for burning