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Burn mechanisms involve permanently removing a portion of a cryptocurrency's supply from circulation, typically by sending tokens to an address where they can't be accessed (a "burn" address). This reduces the overall supply, creating scarcity, which, in theory, can increase the value of the remaining tokens. Many projects implement burn mechanisms as part of their monetary policy to counter inflation or to reward holders. For example, in deflationary models, regular token burns can lead to gradual increases in value over time. However, the effectiveness of burn mechanisms depends on the demand for the token—if demand doesn’t increase, the burn might not have a lasting impact on value. Still, token burns often improve sentiment and market perception.

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