**Why Projects Burn Tokens: The Deflationary Strategy Explained**

Ever wondered why some crypto projects deliberately destroy their own tokens? Token burning is a deliberate strategy where projects send a portion of tokens to a wallet address with no accessible private keys—essentially locking them away forever. It's like removing a chunk of supply permanently from the market.

**The Economics Behind the Burn**

The logic is straightforward: less supply, higher scarcity. When tokens are burned, the total circulating supply decreases. According to basic supply and demand principles, if demand stays constant or grows while supply shrinks, the value per remaining token could increase. It's a mathematical play on scarcity.

**How It Actually Works**

The process involves sending tokens to what's called a burn address—a wallet that no one can access because no private key exists for it. Once tokens land there, they're gone for good. They can't be moved, traded, or recovered. This irreversibility is what makes token burning a credible commitment mechanism.

**Real-World Applications in Crypto**

Projects use token burning across several scenarios: some integrate it into their tokenomics as a deflationary mechanism (continuously reducing supply over time), others burn tokens to fix distribution errors or technical issues, and some use it as a profit-sharing tool where reducing supply indirectly benefits all remaining token holders by increasing scarcity.

**Why This Matters for Investors**

Token burning signals a project's commitment to long-term value creation. It demonstrates that founders aren't just printing tokens endlessly. For holders, it can mean tangible benefits through increased token scarcity. For projects, it's become a key lever in tokenomics design—balancing inflation through rewards with deflation through burns to maintain a stable or appreciating value proposition.