Token burning, within the Solana ecosystem, refers to the permanent removal of tokens from circulation. This process effectively reduces the total supply of a particular token. For example, a project might decide to eliminate a portion of its tokens to influence its economic model.
Reducing token supply can potentially increase the value of the remaining tokens, assuming demand remains constant or increases. This mechanism can be used to reward holders, manage inflation, or correct initial distribution imbalances. Historically, token burning has been employed in various blockchain projects to incentivize participation and create a more sustainable token economy.
