Token Burn
The permanent removal of tokens from circulation by sending them to an inaccessible wallet address (a 'burn address'). Token burns reduce total supply, which can create deflationary pressure on the token's price if demand remains constant. Burns can be one-time events, part of regular protocol operations (like Ethereum's EIP-1559 base fee burn), or buyback-and-burn programs.
“Ethereum burns a portion of gas fees with every transaction since EIP-1559 launched. During periods of high network activity, more ETH is burned than issued, making ETH temporarily deflationary.”
Token Supply
The quantitative metrics describing a token's availability: Circulating Supply is the number of tokens currently available in the market; Total Supply is all tokens that have been created minus any that have been burned; Max Supply is the absolute maximum number of tokens that can ever exist (if capped). These metrics directly impact market capitalization calculations and price analysis.
Tokenomics
The economic model and design of a cryptocurrency token, encompassing its supply schedule, distribution plan, utility within the ecosystem, value accrual mechanisms, inflation/deflation dynamics, and incentive structures. Well-designed tokenomics align incentives between all stakeholders and sustain long-term value. Poorly designed tokenomics can lead to unsustainable inflation or wealth concentration.
Ethereum (ETH)
The second-largest cryptocurrency and the most widely used smart contract platform, created by Vitalik Buterin and launched in 2015. Ethereum introduced programmable blockchain functionality, enabling the creation of tokens, DeFi protocols, NFTs, and dApps. In September 2022, Ethereum transitioned from Proof of Work to Proof of Stake ('The Merge'), reducing energy consumption by over 99%.