Cryptocurrency burning is a technique in the cryptocurrency industry in which project owners transfer their tokens to an address where it is rendered unusable, thus resulting in the reduction of the total supply of the token. Popular Crypto exchange WazirX also burns its native WRX token in a similar fashion, every quarter. The platform recently completed its fifth coin burn this Friday.
Compared to the previous token burning event, this time WazirX burnt 95% more WRX tokens. The event permanently removed $8.2 Million USD worth of WRX from circulation. This amounts to a total of 7,333,333 WRX equivalent to a whopping ₹61.2 Crores INR. So far, the company has burned 21,786,665 WRX tokens, totaling $24.4 million as of today.
The quantity of WRX burned is proportional to the volume and growth of the exchange. Last quarter, WazirX’s trading volume surpassed $14.04 billion (up from $6.1 billion USD in the previous quarter) – the largest in the history of Indian crypto exchanges.
WazirX’s burning technique is successful since the amount of WRX to be burnt is increasing. This will result in a decrease in the token supply and an increase in the token’s value.
Token burns are meant to have a favorable impact on the price, like in the case of WazirX, but it doesn’t imply we should expect enormous gains as a result of the event. Some members of the crypto community have asked this question, however, it’s important to remember that pricing is influenced by a variety of factors other than supply.
Instead, the effects of a token burn are realized with time as demand for the project increases. Newcomers often fail to realize this fact and feel cheated. Hence, it is vital to educate the community about the specifics and fundamentals of Crypto.
As of now, the next WRX token burning event is set for October, with the token currently priced at $1.12, up 2.3% over the past day.
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