Burn mechanism

A burn mechanism is a rule or process that permanently removes tokens from circulation. Tokens are often burned by sending them to an address where they cannot be accessed or spent. A burn can happen either manually, automatically through a smart contract, or as part of a protocol’s fee or supply design. The main advantage of burning is that it reduces the overall token supply, but it does not by default increase the price of a token. A token’s price still depends on demand, liquidity, market conditions, and whether users believe the project has long-term value.

For example, Hyperliquid’s Assistance Fund automatically converts platform trading fees into HYPE tokens and sends them to an inaccessible system address. In December 2025, validators voted to formally treat about 37 million HYPE in that address as burned.