The Strategic Importance of Token Burns: A Look at Recent Events Across Prominent Crypto Assets

A common practice in the world of cryptocurrency is token burning, which aims to reduce the overall circulating supply of a digital asset.

A common practice in the world of cryptocurrency is token burning, which aims to reduce the overall circulating supply of a digital asset. When a digital asset’s supply is decreased, the price of that asset may increase, benefiting holders of the token.

These events, however, do not guarantee immediate price jumps and could even be considered a market manipulative tool for projects that do not have strong fundamentals. In the last few years, however, strong projects with solid fundamentals have conducted meaningful burn events.

Recent Burn Events Across Prominent Crypto AssetsIn the past few months, several major cryptocurrencies have been engaged in token burning, some of which involved a large percentage of their fully diluted valuations (FDV). Here’s a look at the most significant burns that have happened lately.

$BGB – A Massive Burn on April 17thOn April 17, a leading digital asset in the market, the $BGB token, burned a quite remarkable 2.55% of its FDV. It is nearly 2.5 times the amount of mendacity needed to get on a billionaire’s radar.

Now, this is a part of the show where, ordinarily, I might try to stick a little price forecast in there for good measure, but to be honest, the $BGB token has such a strong community that the result could very easily steer the asset in an upward trajectory.

$BNB – Consistent Burn Strategy ContinuesBinance Coin ($BNB), the native token of the Binance ecosystem, has a firm handshake with token burns. On April 16, Binance burned tokens, a burn that, when added up, took out 1.00% of the token’s FDV. Now, of course, this is the Future Development Value we’re talking about, and some observers are putting the number to the tune of $800 million for what Binance actually burned. Noting that since the next FDV is never quite the same as the last, our tokenomics friends over at Binance have kept the price level fortuitously stable and increased the runway for long-term growth. And they do this with a wink and a smile.

Token burns help reduce supply and can support price growth. Here’s a snapshot of the latest burn events with % of FDV:

$BGB – 2.55% of FDV burned on Apr 17

$BNB – 1.00% of FDV burned on Apr 16

$ORCA – 30.5% of FDV burned on Apr 16

$OSMO – 0.01% of FDV burned on Mar 9

$BORG – 0.04% of FDV burned on Mar 5

$CAKE – 4.04% of FDV burned on Feb 27

$QUBIC – 0.08% of FDV burned on Feb 19.

$ORCA – A Major Reduction in FDVMaybe one of the most zesty burns in current memory happened on April 16, when the $ORCA token underwent a burn of a staggering 30.5% of its FDV. In terms of amount, in relation to the current circulating supply, and in relation to what it might mean for the short-term and long-term price movements of the token, this is a very big deal. It’s also obviously a very rare deal. So when something this significant happens, it’s only natural for investors to start thinking about the underlying reason for such a drastic move.

$OSMO – A Modest Burn in MarchOn March 9, the token $OSMO, which powers the decentralized exchange Osmosis, burned only 0.01% of its FDV. Given the current conditions of the crypto economy, this is a comparatively low percentage for a token to be burning. And unlike many other projects that are deflationary by design, $OSMO is not:

“Unlike other deflationary tokens, OSMO inflation isn’t motivated by market arbitrage opportunities; there aren’t external OSMO governance tokens waiting to be minted that will drive up the price of OSMO. In fact, the only motivation we have for burning OSMO right now is to make OSMO worth more over time.”

$BORG – A Tiny Burn with Potential ImplicationsOn March 5, the $BORG token had a tiny burn event, with just 0.04% of its FDV getting taken out of the circulating supply. For context, 0.04% of 67 million is about 28,000. The amount isn’t large enough to visibly impact price or supply in any meaningful way, but again, it is about the principle of providing the appearance and reassurance that a small, as of yet, not super significant project like $BORG is managing its token well.

$CAKE – A Significant Burn in February