Definition
Burn is a concept in crypto and DeFi where tokens or coins are intentionally destroyed so they can no longer be used, transferred, or recovered. This is usually done by sending assets to a special address that has no known private key, effectively removing them from the circulating supply. Burn mechanisms are often encoded in smart contracts or protocol rules and can be triggered under predefined conditions or governance decisions. The act of burning is transparent on-chain, allowing anyone to verify that the assets are permanently inaccessible.
Burn is closely tied to a project’s Tokenomics, because reducing supply can influence how value and incentives are structured within a protocol. It is conceptually the opposite of Mint, which creates new tokens and adds them to circulation. Some systems coordinate burn events with other supply-adjusting mechanisms, such as Halving schedules that reduce issuance over time. Across DeFi and broader crypto, burn is treated as an irreversible change to the asset’s total and circulating supply.
Context and Usage
In DeFi, burn is often used as a monetary policy tool to manage token supply and align incentives among participants. Protocols may define automatic burn rules, such as destroying a portion of transaction fees or specific types of on-chain activity. Because burns are executed and recorded on-chain, they become a verifiable part of the asset’s history and Tokenomics model. Over time, recurring burn events can significantly alter the balance between Mint activity and total outstanding supply.
Burn can also serve as a signaling mechanism, demonstrating a protocol’s long-term commitment to a particular supply strategy. When combined with mechanisms like Halving, burn policies help define how scarce a token may become relative to demand. The precise impact of burn within a system depends on its interaction with other Tokenomics parameters, including issuance, distribution, and governance rules. Regardless of design, the core idea remains that burned tokens are permanently removed from effective circulation.