Coin Burn is a sort of deflationary mechanism built inside the cryptocurrency. The reason why cryptos are so valuable is that there is a limited supply, which keeps on reducing over a period of time. Let’s say for Bitcoin, it is the halving process that happens once every 4 years. But for altcoins that don’t use the Proof of Work (PoW) consensus mechanism, Coin Burn is one of the mechanisms that ensure the supply is reduced as the demand goes up.
So, if people trade more on WazirX today compared to last year, that means the demand has shot up, and the demand of WRX per se has gone up. When this scenario happens, we burn a section of WRX tokens, which essentially means these tokens are out of circulating supply, and that leads to scarcity.
Here’s the video, you can refer to:Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.