token burning
Burning a token means permanently destroying it, removing it from the circulating supply for good. For an ERC-20 this is a call to _burn(from, amount), which subtracts from the holder's balance and, crucially, also subtracts from totalSupply, so the tokens are not moved to anyone — they cease to exist. An older, cruder method sends tokens to a burn address that has no known private key (such as the zero address or 0x...dEaD); the tokens are technically still 'there' but unspendable forever because no one can sign for that address.
Why destroy value on purpose? Mostly to manage scarcity and economics. Deflationary tokenomics burn a portion of tokens over time to offset issuance or reward holders by shrinking supply; buyback-and-burn uses protocol revenue to purchase tokens on the market and burn them, returning value to holders without paying a dividend. Ethereum's own EIP-1559 burns the base fee of every transaction, so heavy network use can make ETH net-deflationary. Burns are also functional: redeeming a wrapped token burns the wrapper to release the underlying, and burning a 'mystery box' NFT is what triggers revealing its contents.
Two cautions. First, burning is irreversible by design — there is no undo, no recovery, and accidental burns (sending to a burn address by mistake) are simply lost. Second, burning is not the same as locking or vesting: locked tokens still exist and can re-enter supply later, whereas burned tokens are gone from totalSupply entirely. When evaluating a token's 'supply reduction', check whether tokens were truly burned (totalSupply fell) or merely moved to a wallet the team controls.
function burn(uint256 amount) external {
_balances[msg.sender] -= amount; // remove from holder
_totalSupply -= amount; // and from existence
emit Transfer(msg.sender, address(0), amount);
}A real burn lowers totalSupply, not just a balance.
Sending to a burn address and calling _burn look similar but differ: _burn lowers totalSupply, while a burn address leaves totalSupply unchanged with the tokens merely frozen out of reach.