Cryptocurrency platforms often resort to a unique strategy called "burning" to stabilize their digital assets' prices. But what does burning crypto actually entail? How do you burn digital currency? Let's take a closer look at how DogeMiyagi (MIYAGI), Shiba Inu (SHIB), and Binance Coin (BNB) utilize this practice and whether it helps maintain price stability.
Set The Coins On Fire? What Burning Cryptocurrencies Means?
Burning cryptocurrency involves permanently removing tokens from circulation, thereby reducing the total supply and potentially increasing the value of the remaining coins. The process is akin to stock buybacks, where companies repurchase their own shares to cancel them out. By creating scarcity, cryptocurrencies aim to boost the perceived value of their assets and drive up demand.
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Crypto projects often buy a specific amount of their tokens from the market and transfer them to a "burn address" as a way of burning tokens. This address serves as a black hole for the tokens, as there is no way to reverse the transaction or retrieve the coins. The tokens effectively cease to exist in practical terms.
DogeMiyagi (MIYAGI) - Waxing and Waning with Token Burns
DogeMiyagi, a new meme coin inspired by the Karate Kid movies, has an amusing approach to token burns. The project plans to carry out five burn stages, each representing one of the Karate Kid films. The burned tokens will reflect the official release dates of the movies in the United States.
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Before the official launch, DogeMiyagi intends to burn a significant number of tokens in honor of Mr. Miyagi's fictional death at the age of 86 years and 5 months. The project aims to burn a staggering 86,050,000,000,000 tokens. This burn will leave the token with a maximum supply of 9,518,812,011, compared to the current total supply of 96,192,515,112,011.
DogeMiyagi's burn strategy revolves around controlling the token's supply to increase its value. By reducing the available units, they hope to enhance the coin's appeal and generate demand.
Shiba Inu (SHIB) - A Fiery Quest for Value
Shiba Inu has its own approach to token burning. SHIB holders burn approximately a quarter million tokens every day, equivalent to a few thousand dollars in value. Meme coins like Shiba Inu often possess hyper-inflated total supplies, with billions or trillions of tokens in circulation. Consequently, their individual token value tends to be less than a dollar or even a fraction of a cent.
To incentivize burning, Shiba Inu offers a burning portal called ShibBurn, which rewards users with a different token in exchange for burning their SHIB coins. The project gained significant attention when its founder(s) sent half of the supply to Ethereum co-founder Vitalik Buterin, who burned 90% of his SHIB holdings.
The burning of SHIB tokens by Vitalik Buterin caused the token's price to surge by nearly 40%.
Binance Coin (BNB) - Fueling Stability with Regular Burns
Binance Coin, the native cryptocurrency of the Binance exchange, implements a quarterly burn event to maintain stability and security. During these burns, Binance repurchases BNB tokens from the market and subsequently destroys them.
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The most recent BNB burn occurred in January of this year when over $575 million worth of BNB tokens were burned as part of a broader program. The exact amount to be destroyed in the upcoming burn at the end of Q2 2023 is yet to be determined. However, estimations suggest that over 2,000,000 BNB could be destroyed.
Binance aims to burn a total of 100,000,000 BNB tokens, continuously reducing the circulating supply to enhance value and control inflationary pressures.
Playing with Fire, But Does It Keep the Price Stable?
Burning cryptocurrency has become a popular strategy for crypto projects to control supply, increase value, and ensure stability within their ecosystems. DogeMiyagi, Shiba Inu, and Binance Coin have each embraced this practice with their unique approaches.
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While burning tokens can create scarcity and potentially boost demand, achieving long-term price stability is a complex task influenced by various factors. It's essential to consider market dynamics, investor sentiment, and utility within each ecosystem.
Ultimately, burning tokens is just one tool in the crypto world's arsenal, and its effectiveness in stabilizing prices may vary. Nevertheless, the allure of token burns continues to captivate crypto enthusiasts, adding a touch of excitement and anticipation to the ever-evolving landscape of digital currencies.
DogeMiyagi:
Website: https://dogemiyagi.com
Twitter: https://twitter.com/_Dogemiyagi_
Telegram: https://t.me/dogemiyagi
