When we hear that some blockchain company burned a portion of its token supply, do you understand how and why this is done? Token burn means that some amount of tokens will be removed from circulation. Technically, they don’t get burned, because there’s no way to destroy an already existing token. Burning, in the case of this particular burn by MPG, means that they get sent to a blockchain address that does not have a private key. As such, nobody will ever be able to get them back into circulation as they are inaccessible. That’s why these tokens are considered “burned” – they are out of circulation forever.
What companies burn their tokens?
One of the most well-known companies that engage in this practice is Binance. Binance has been burning tokens since the initial emission. Their goal is to burn half of the supply to ensure the amount in circulation reduces, which could have a positive influence on the price of BNB tokens. They simply spend a part of their profits on a quarterly basis of the tokens, and that allows the remaining BNB to increase in value. Thus, the price of BNB has grown from $0.50 to $32, and it still stays in the upper range despite the long bear market for altcoins.
Another example of a well-known project is OmiseGo. Soon they schedule the launch of the mainnet on the Proof-of-Authority algorithm, meaning that initially all transactions will be confirmed by the developer’s node. All rewards received from staking during that period, until the launch of the PoS implementation, will be spent on buying and burning OMG tokens. As the date of the launch approaches, the token also steadily increases in value.
Recently, the Stellar Development Foundation burned half of its supply of XLM. These tokens were from the company’s funds. Currently, there’s only 20 billion XLM in circulation, and the Foundation burned 50 billion XLM. They still have 30 billion in reserve, but they don’t plan to release it to the market yet, rather having a long-term plan for 10 years. The token burn serves this plan well, as the price of XLM went up +25%.
MPG token burn – the less the better
Similar to the previously mentioned companies, Max Property Group is also dedicated to burning its tokens. Up until today, they have burned over 200,000,000 MPG, which is more than 21% of the initial supply. That means that the tokens, its main purpose being to pay the fees for all kinds of services on the platform, will also become more scarce. Moreover, the MPG tokens, received as the fee, will also be burned automatically.
The most important fact here is that the platform’s owners wish to reduce the amount of MPG tokens in circulation, which should have a positive impact on the price of the token. As we previously mentioned, the tokens sent to the burning address can’t be retrieved, and the transactions on the Ardor blockchain can’t be reversed, so they’re gone for good. Will this influence the price positively? It’s impossible to predict such things, but as we see, the tokens of all projects trying to be open to their investors have seen good growth, and we are certain that Max Property Group won’t be the exception.