A significant token burn is on the horizon in the QBT ecosystem. Approximately 70 Crore, or 70% of the existing QBT, is slated for incineration. This strategic step will see the total supply plummet from 100 Crore to 30 Crore, ensuring a sustained demand for QBT.
Coin burning is a deliberate process where a cryptocurrency token is sent to an address intentionally made inaccessible for storage, effectively removing it from circulation.
This address, often referred to as a burn or eater address, is like a vault with no key — once tokens enter, there’s no retrieval. While anyone holding the cryptocurrency can technically engage in coin burning, it’s typically a strategic move made by the creators of the coin.
The concept of destroying coins through burning predates the era of Bitcoin and bears a resemblance to stock buybacks. While not identical, both practices share the goal of reducing the available supply, albeit through different mechanisms.
In 2017 and 2018, prominent cryptocurrencies like Binance Coin, Bitcoin Cash, and Stellar executed token burns to trim their supply and boost prices.
The Terra project made headlines in November 2021 when it executed one of the largest layer 1 token burns ever. By incinerating 88.7 million of its LUNA tokens, equivalent to around $4.5 billion in value at the time, Terra initiated a significant shift in the token’s ecosystem. This move, approved through a vote in the Terra community, led to a surge in the value of the remaining LUNA tokens
Shiba Inu, a notable cryptocurrency, has witnessed a series of impactful burns, notably the initial burn by Ethereum founder Vitalik Buterin, who incinerated over 90% of the SHIB tokens received from its creators. In May 2021, Vitalik executed a historic burn, eliminating approximately 410 trillion SHIB tokens, equivalent to 40% of the total supply.
But why are token burns necessary, and what do they achieve?
When tokens are removed from circulation, the total money supply decreases. This reduction leads to an increase in the purchasing power of the remaining tokens. In essence, by burning tokens, we demonstrate deflation—a phenomenon where the value of money strengthens.
Imagine if a central bank were to take a significant quantity of existing currency and publicly incinerate it in a central location, making the event known to all. This act would provide a clear, public demonstration of deflation. In this scenario, you would have a tangible representation of how much currency has been removed from circulation.
Token burns can also enhance investor confidence and market stability. By actively managing the supply, projects signal a commitment to maintaining a healthy and balanced ecosystem. This transparency can foster trust among investors, leading to a more robust and sustainable market.
Just as a skilled conductor guides an orchestra, token burns allow developers and projects to orchestrate the flow of their cryptocurrency. By selectively removing tokens from circulation, they can fine-tune the available supply. This can be especially vital in cryptocurrencies that initially launch with a large number of tokens, as it provides a means to adjust and stabilise the market.
When QBT engages in token burning, it deliberately withdraws tokens from circulation, effectively reducing the total supply from 100 Crore to 30 Crore. This calculated manoeuvre leads to a noteworthy boost in the purchasing power of the remaining QBT tokens.
The steadfast commitment of QBT to burning a significant portion of its supply exemplifies its dedication to maintaining a well-balanced ecosystem. This transparent approach instils a sense of trust in investors, thereby nurturing a more robust and stable market. By judiciously burning 70% of the supply, QBT aims for equilibrium and stability within the market.
Through the implementation of these strategic token burns, QBT takes proactive steps towards refining and optimising its ecosystem, ensuring a future that is both sustainable and flourishing.