Hello Readers, today we have an interesting news from WazirX India as they are about to conduct their 2nd WRX burn event this week. Today, we are going to learn what is meant by Token Burn and how it is executed. Fortunately, this article has been sponsored by WazirX India, so do check them out after reading this article.
What is Coin Burning?
This is essentially a process of removing some coins from the existing supply. Today, we are primarily discussing about WRX token. The first burn of WRX was done successfully on 5th of July, 2020 which you can find here.
This came as a statement with proof on the WazirX Blog
Now, let’s elaborate on what is meant by Coin Burning 🔥
As the trading volume on WazirX keeps on increasing every quarter, the amount of coins getting off the supply will keep increasing as well. As a result of burning of a token, what happens is that it get’s short in supply and this gives a push to the price of the coin which benefits the WRX holders.
How does it work ?
When a coin holder, (here WazirX) calls a burn event of WRX, it happens by executing function called as the burn function. This removes the decided number of WRX token’s permanently from the total supply. The contract verifies whether WazirX has that many WRX with them and if they have enough the function get’s executed.
As I said above, If anyone executes the burn function to burn the coins, they get lost forever. These transactions are 100% transparent and you can see them on the public ledger, above I have attached links for the 1st WRX burn event proof of transactions.
As described in the WRX whitepaper, WazirX will burn WRX tokens based on the trading volume on crypto-to-crypto platform every quarter. It will go on until WRX supply of 100 Million WRX, i.e., 10% of WRX supply is burned.
Generally, after the coins are burned. The price goes up as the supply falls short. It’s an interesting thing to note and a concept which everyone should understand. Thanks for reading this article. See you next time !