The law of supply and demand is one of the most important axioms of economics. It states that the price of an asset is determined by supply and demand. Token burning is a technique used to increase the price of a crypto asset by controlling the supply. It involves sending crypto tokens to a wallet which does not have private keys. This wallet can only receive crypto. When tokens are sent to this wallet address they essentially become inaccessible. With the supply being reduced and the demand remaining constant, the price of the asset increases.

It is important to note that Tokens once burned are lost forever. Any user who wishes to burn tokens must double-check the amount being burnt and ensure that the tokens are being sent to a wallet without private keys. With that said let us dive into how Token burning works.

The central part of a token burning process is the Proof of Burn (POB) consensus mechanism. It verifies and validates each burn transaction and these transactions can be checked using the blockchain explorer. Similar to other consensus mechanisms, it is used to ensure there is no double spending or fraudulent transactions. It also allows miners to mine new coins as several miners are required to burn coins first to mine them.