StrategyBeginner#Tokenomics#Metrics
Burn Rate
B
Definition
The speed at which a project removes tokens from the total supply, often used as a deflationary mechanism to increase value.
Verified by CryptoLV Alpha
Concept Diagram
Key Takeaways
1
Burn rate is the speed at which tokens are permanently removed from circulation
2
Burning tokens sends them to a dead address making them permanently inaccessible
3
EIP-1559 introduced ETH burning where base fees are burned reducing ETH supply over time
4
Higher burn rates create deflationary pressure potentially increasing token value over time
Practical Example
Since EIP-1559, Ethereum has burned over 4 million ETH (worth ~$12B). On a high-activity day, 2,000 ETH might be burned while only 1,800 ETH is issued to stakers — making ETH net deflationary on that day.
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Related Terms
Blockchain
Market CapThe total market value of a cryptocurrency's circulating supply (Price x Circulating Supply).
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VeTokenomicsA token model where users lock tokens for a period to gain 'Vote Escrowed' power, aligning long-term holders with protocol governance.
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StablecoinA cryptocurrency designed to have a stable price, typically by being pegged to a reserve asset such as the US Dollar.
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TokenomicsThe study of the economic quality of a cryptocurrency, including supply, distribution, and utility factors.
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