After the first part of this article, here is some deeper explanation of the token burning.
As a result of a price drop, projects that issue cryptocurrency often ‘burn’ to maintain token prices. This method is to incinerate supplies owned by a company without putting them on the market.
In general, looking at the token ecosystem of a project, the token returns to the company as a natural use of the token issued. And the company incinerates it to maintain a certain value.
Token burning: the differences with Buy Back
On the other hand, if a company that issues a token directly buys the token in the market, it is the “buy-back.” As with burning, the bi-bag also helps to build prices.
Binance token burning also has its own buy-back scheme.
However, burning is to permanently reduce distribution by sending a token to a wallet that cannot be found. While buy-back token will likely be circulated back to the market at any time. Unless otherwise stated because the company has a token.
When you do cryptocurrency trading, you often hear about the zero-month lock-up period. Lock-up means that a person or institution that owns a token cannot sell the token during that period.
Typically, this lock-up period has the purpose of institutions and early investors. If the blockchain project has raised investments through the ICO or subsequent investment.
The move aims to prevent the value of cryptocurrency from falling sharply due to the sale of large amounts of cryptocurrency in a short period of time when the value of the initial cryptocurrency rose. Such as when it was listed on the exchange. Although this lock-up is not in circulation for the duration of the set period, a certain value maintains. When the lock-up released, the amount of distribution will increase rapidly, leading to a drop in token prices.
