Steemit Crypto Academy Contest / S5W4 - Token Burn
Use your own words to determine what is token burn? and explain how it works (if possible add an illustration for it)?
List the benefits of token burning with a detailed explanation of each.
Why does the blockchain burn its tokens? Study the case of a blockchain that burned its tokens by identifying the results obtained.
The burnsteem25 company that encourages burning 25% of your publishing revenue? Do you think it will help boost the value of steem currency in the medium term
Hey 👋 dear steemians
Today is another lovely day to me because i learnt something new today concerning burning of crypto asset, Although this is not my first time hear the term burning of crypto asset. The first time I came across the term burnsteem was from an entry in one of the steemit engagement contest. The second time I heard about the burning of crypto asset was after Luna coin crashed and some of its whales where burning their asset just to increase the price of Luna coin to it's initial value, but all this while I still didn't get the full understanding of what happens when a coin or token was burnt until today.
Token burn is a famous term to all crypto investors because almost every Blockchain do burn their native coin for so different reasons, although the most famous reason is that the want the reduce the supply so it would be quiet scarce in the market. Burning a digital asset entails sending it to a location from which it can never be recovered, also known as a burn address, which effectively removes the digital asset from circulation by locking it up for all forever.
Token burning is the process of permanently removing a fraction of a crypto asset by sending it to an inaccessible wallet or a null address to be brunt, thereby reducing the overall supply of the crypto asset. This phenomenon occurs on a regular basis and can be triggered voluntarily or during a transaction.
Just like I was taught in economics study, I was taught about the supply curve and demand curve and everything about demand and supply in the fiat market, from what I was taught I remember that if the demand of an asset or currency is high and the supply I'm the market is low, then the price of the asset or currency is expected to go bullish and if the Supply of an asset is higher than it's demand the price of the asset goes bearish. Another thing to no is that the pressure of the demand of the asset also affected how bullish of bearish the asset would goes. This theory don't only affects the fiat currency market but it also affects the crypto market.
Token burn is one of the most famous and miraculous way to boost the price of any crypto asset because burn token is aim at reducing the supply of the asset in market by removing the particular amount of the asset from circulation buy sending it to a burn account. Just like other coins that support token burn for example Luna, Shiba Inu, BNB etc, our dear coin steem is also be burnt to an burnt account known as null and the tag used is burnsteem25.
From the image above you will see how steem is burnt by a devoted steemian, In the post you will see the author did set 25% of the rewards to get burnt in the null account .
They are so many ways Blockchain technology burn the coin/ token to reduce the total number supply in circulation and I will be writing about the few I know about, the only thing I want you to keep in your mind despite how it's done very effective on the price movement of the asset.
✅ Sending to null account
The most famous medium of burning tokens especially Steem on steemit is by sending the asset or rewards to an account that doesn't exist also known as the null account, I said this account doesn't exist because if you Check for the null account on Steemworld you would see noting. That's is to say that account help automatically burn any assert sent into the account, the sending could be in two ways:
- By Setting percentage of your reward to @null account.
When you finish creating your content and you are about to publish or post your article, you can kindly set @null as beneficiary to the post. The percentage you wish to burn is your sole decision but on steemit 25% would not be bad and when the post cash out after 7 days 25% of the rewards would automatically be burnt.
If you check well you would see that the account said it was created 53 years ago, which is older than most steemians even our lovely CEO Justin Sun and if you check the wallet you would see it's worth 0 dollars despite how many users send steem into the account.
- You can just decide to manually transfer some quality of steem into the dead wallet/ burn wallet @null and the steem asset automatically get removed from circulation.
Creating token burn functions
Incase you don't know what a function is, functions are set of code written by a programmer that can be reused on by the user, function are small piece of code that perform specific actions in a software. So a platform can just create a small piece of code that would help investors burn your asset by just click and selecting a bottom in the software.
Burning of gas fees
Some Blockchain like BNB chain large portion of gas fee are automatically burnt, to reduce the supply of the coin in the market and hopefully increase the price of the asset. Since the Bruno upgrade on November 30, 2021, BNB Chain has burned approximately 860 BNB per day. Second, Binance uses Accelerated BNB burn to burn BNB quarterly. The 17th burn occurred in the fourth quarter, removing over 1.3 million BNB from circulation.
Automatic burn
The Binance smart chain Blockchain has also used another medium, to burn Crypto asset easily and safely. The Binance smart chain team came up with a technical skill that would automatically burn a lot of steem of the BNB total circulation falls below 100,000,000 BNB in the market, this is to help the Blockchain withstand any cause that might want to crash the coin. That's is to say if eventually the total amount of BNB in circulation hit 99,000,000, them an automatic burn would occur to stabilize the BNB.
🌹 larger profit for investors
As you have earlier said the burning of crypto help reduce the amount of asset in circulation, so therefore the supply is reduced and the demand is really high. This act would help users boost the price of the asset and at same time double the investment value, the asset price is very much increased especially if the asset to be burn is improve very fast.
Burn token really help prevent cause the price of the asset to experience inflation, because the asset would have a high demand and low supply causing the asset to become very scarce, this scarcity is what causes the price of the asset to grow fast and all holding investors tends to make much more profit from trading the asset.
🌹 Increase in demand of the coins
Because crypto assets are based on supply and demand, one of the main reasons that most crypto networks burn their coins is to increase the coin price. Burning the coins reduces the coin supply, causing scarcity. Scarcity is what drives up coin demand. Scarcity is a fundamental economic concept that assigns monetary value to a specific asset. Crypto digital assets are deflationary, which means that the supply of crypto coins is fixed, with no additional coins created after the total supply is reached.
For example, because Bitcoin has a fixed supply of only 21 million coins, when demand rises, the price of Bitcoin coins rises as well. Because the number of Bitcoins available in the market is still limited, the price of Bitcoin coins will rise as well. Similarly, if the supply of Bitcoin falls due to the burning process, the price of the digital asset will rise because the current amount in circulation is insufficient to meet the growing market demand.
🌹 More investors to th project
When an investor is looking for what and where to invest, the first thing the check is the safety and future of blockchain, and whenever a the Blockchain has potential of been successful or if they platform is already successful then they would be so many investors willing to invest in the platform.
They is a saying that success attract great personality, no investor is willing investor on any asset that is very low and don't have upcoming potential.
Burn token are actually done with the goal of making a the Blockchain grow stronger and richer than it's mates, whenever a Blockchain organize a burn token, they price of the asset or native coin grows higher than it used to be just like case of Shiba Inu, BNB, and even Steem coins.Some blockchains burn their tokens once in a while, while others burn them more frequently via a predefined interval or the auto-burn mechanism.
Token burn has been the most effective and powerful mechanism to help a crypto currencies or token withstand so many bearish crash, Blockchains burn their tokens to ensure that the value of their product is preserved in order to attract more investors and achieve the project's goal. They do this to reduce the supply of the asset available for trading in the market, causing demand pressure to exceed supply pressure.
Just like most crypto currencies and Blockchain technologies, Ethereum also had to burn so many Ethereum coins from the total Ethereum in circulation to reduce it supply of Ethereum coin and increase demand of Ethereum in the crypto market, and this tactics really worked for the Blockchain and till now the still retain their position as the second most expensive crypto currency after Bitcoin.
The Ethereum burn was implemented with EIP-1559, and thousands of ETH have been burned and removed from total circulation since then, The Ethereum burn has increased in recent months, with an estimated of over eight hundred thousand Ethereum is being burned each annually.
Since August, Ethereum has reduced the issuance of its currency, Ether, by 65%. According to Watch the Burn, an Ether data dashboard, that is more than the equivalent of $5.8 billion burned, destroyed, and removed from circulation. The Ethereum Improvement Proposal (EIP) 1559 was implemented by the network last year. This resulted in a new system in which transaction fees, which were previously all paid to miners, were split into a base fee and a miner tip. The miner now receives the tip, but the base fee is burned or destroyed.
The another reason for the burn is to keep miners from gaming the system, they dishonest minners could fill blocks with spam transactions, increasing the minimum fee for everyone except themselves because they would recoup all fees." Furthermore, the burn ensures that transaction fees are paid in Ether, "cementing Ether's role as the Ethereum's currency."
The lovely company that runs such type of token burn is my best social media known as Steemit, and I really support the motive of burning steem. Before I start I want to explain the term Burnsteem25, Burnsteem25 is composed from three words which are ( Burn, Steem, 25%).
🕊️ Burn :
Burn has to do with the removal of crypto asset from the total circulation in the crypto market, this act is usually done to increase the demand of the crypto asset in the crypto market and also the act of burning increase the price of the asset. This burn action can occur both of fiat currencies and crypto currencies.
🕊️ Steem:
Steem is the native coin for steem blockchain and it's also one of the asset used to reward content creator on steem blockchain, Steem is a coin would good potential of becoming the best some day, steem coin is currently 210 naira each on Roqqu exchange.
🕊️ 25%:
Just like the others 25% term is a simple and self explained term, it also a quarter of every hlhundered percent.
So therefore Burnsteem25 means burning 25% of your reward and as you know this rewards are received in Steem, this is an easy means of burning steem without directly removing the steem from your savings or holding, and with this method the amount of steem burnt would varies among steemian because rewards are not assured.
I am in full support of this suggestions on steemit because I know the suggestion would would Steem grow better and faster than it's mates, I would encourage any one who create content to once in while support the burnsteem25 project, by setting at least 25% of author rewards to null. This 25% reward would be sent to the the steem dead wallet which is officially known as @null then null account would automatically burn the steem by removing it from the total number of Steem circulating in the market.
Burn token is a healthy practice for every Blockchain technology, most especially for our dear platform steemit. I have also proudly participated in this burnsteem25 exercise and I would advise others to try it out even if it's for once.
Thanks for for going through, @starrchris care's ❤️, I am inviting my lovely friends @shahariar1 @ekaa @waterjoe @josevas217 @disconnect @mvchacin @xkool24 @sahmie @preye2
Greetings friend...
As you always do you have given an extraordinary explanation of how token burn is a welcome development in the Blockchain Ecosystem. Like with all examples given, we hope Steem follow suit. Thank you for sharing with us, Goodluck!
Thank you very much my friend, no be small extraordinary post.
Upvoted! Thank you for supporting witness @jswit.
Thank you very much dear sir
Interesting burn steem articles to read and good luck friends :)
Thank you very much, I am glad you like it
Greetings friend, what a terrible situation you are going through due to the effects of the rain, it has caused a lot of flooding in the community affecting its development. That lunch looks very delicious, good that the children devoured it. I hope your health condition improves soon. Blessings.
😂😂😂😂😂, thanks for going through my article
It is true that burning of tokens is one of the ways that is used to improve the price of tokens in the market because it reduces the overall supply of the asset.
Furthermore, this helps to strengthening the credibility of the project to attract investors and generate more incentivization for the already existing investors. Thank you for sharing good information on this topic.
Yea it would make the demand go very high and price would also ho higher
That's correct . The inaccessible wallets don't have private key so transaction to transfer out funds is not possible as private key is needed to sign these transactions.
That's right as increase in price is the ultimate goal for investors .
You have published a high quality post . If you don't mind , i would suggest one more round of proof reading. As for i can analyse , perhaps you have done voice typing due to which there are some errors like "they in place of the" etc.
Thank you
Thank you very much my friend, your comment is really educative
Thank you, friend!
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Hello brother.
You have presented a very informative and well-managed post as always. I really liked your way of presenting the following definition of the Token Burn.
Really good, you have explained the token burning in a very brief way within this single line. The main reason behind the burning of tokens is to reduce the circulating supply of a token.
When the supply is reduced, the demand is increased accordingly and hence the price of the respective token can be improved.
Thanks a lot for sharing with us and wishing you a very good luck for the contest. 🤞
From your comment it's obvious you are a good Blockchain expert.