After 2021’s extended bearish market run, investors eagerly look forward to 2022, seeking new opportunities and crypto projects to try out.
Many established cryptos have been tipped to rebound from their slump in the coming months. On the other hand, new tokens are entering the market every month, each offering different utilities. These projects have various tokenomics, which go a long way in determining whether or not they will be successful projects in the near future.
Today, many analysts and market watchers are paying close attention to tokens with “crypto burning” features, with many of these assets tipped to pump in 2022. Before we look closely at some of these assets, let’s examine crypto burning and its role in tokenomics.
What is Crypto Burning?
Crypto burning is the act of permanently eliminating a fixed quota of tokens from the circulating supply. To do this, the developers of a project send the excess tokens to a burn address. A burn address is a crypto wallet without private keys. As private keys are the only way to access a cryptocurrency wallet, the transferred tokens are essentially lost forever.
At this point, you’re probably wondering why developers would want to destroy tokens by removing them from the circulating supply. Additionally, you’re also thinking about some cryptocurrency projects with virtually unlimited market supply. In fact, the following questions are probably on your mind:
- Is it necessary to burn cryptocurrency?
- Are tokens with this feature necessarily more valuable than those without?
- Should you invest in tokens with crypto burning?
Indeed, knowing the answers to these teeming questions is essential to understanding the core of this article. We’ll provide a detailed answer to these questions and more in the section below.
The Tokenomics of Cryptocurrency Burning
The primary deciders of assets’ prices are the forces of demand and supply. Price and demand dwindle when an asset is abundant in the market. On the other hand, the scarcity of an asset can drive up its demand and ultimately its price.
Furthermore, cryptocurrency projects have different built-in mechanisms to ensure that their prices remain high. As typified by the mixed fortunes of the hundreds of tokens on the market today, not all the mechanisms are 100% efficient. This aspect of the cryptocurrency is known as tokenomics – the factors that affect a token’s value.
Crypto burning is essential to a project’s tokenomics, as it seeks to reduce market supply and drive up its value. For instance, algorithmic stablecoins regularly burn tokens to ensure their dollar-pegged values remain constant. Additionally, if the demand for these stablecoins increases and their prices drift away from their dollar pegs, a smart contract protocol issues new tokens to regulate the price.
Another popular example of the crypto-burning phenomenon is Bitcoin, which has a fixed market supply of 21 million. When the demand for the token goes up, the price goes up, too, given that the supply is fixed. Likewise, if the cryptocurrency’s supply reduces after burning, its value appreciates because of scarcity.
Top Coins That Can Pump Your Profits via Crypto Burning in 2022
Now that you know the impact of crypto burning on a token’s value, it’s time to jump straight to the heart of the matter. Without further ado, here are the top tokens that can pump your profits with crypto burning in 2022:
Binance Coin (BNB)
Binance is best known for its exchange platform, which sees more trades done than other platforms, including Coinbase. With a daily trading volume of nearly $80 billion and 90 million global customers, Binance is by far the largest cryptocurrency exchange platform in the world.
Binance coin (BNB) was issued by Binance and initially ran on Ethereum’s blockchain as an ERC-20 token. Now, it operates exclusively on the Binance Smart Chain. BNB launched in 2017 to an ICO (initial coin offering), with the tokens distributed among angel investors, the founding team, and various other participants.
Exactly half (100 million BNB) of the tokens were distributed in a public sale, with Binance raising $15 million from it. Per its whitepaper, BNB is burned every quarter and will continue to do so until 50% of its total supply (100 million BNB) is destroyed. This practice keeps BNB’s market supply fixed and ensures that the token remains scarce and valuable. At the time of writing this article, BNB is worth $293.92.
Tamadoge is the latest meme coin in town, destined to pump massively in 2022 and officially dethrone Dogecoin and Shiba Inu as the market leaders in the meme coin niche.
As a meme coin, TAMA’s biggest selling point is its utility – something its major competitors lack. The likes of Shiba Inu and Dogecoin have their claim to fame with their association with a social media trend. As with all social media trends, the rave eventually dies out, which is why these two meme coins continue to underperform.
TAMA’s whitepaper states that a quota of tokens will be burned regularly to keep the price high. For investors, TAMA is an excellent asset choice guaranteed to pump massively this year and in the foreseeable future.
IMPT’s approach to cryptocurrency burning is quite unique. There is a unique marketplace for trading carbon credit tokens, and users have to sign up to the official platform and purchase IMPT tokens with fiat or other cryptocurrencies. Afterward, the purchased tokens have to be converted to carbon credits, with the latter being minted into NFTs.
Subsequently, users can choose to burn carbon credit tokens or keep the NFTs for investment purposes. Additionally, IMPT has a unique social platform that monitors users’ efforts and contributions to climate action. You get points based on these contributions, and other activities like retiring carbon credits, getting NFTs, shopping, and referrals.
Also, businesses can benefit from IMPT’s social platform via store integrations. IMPT’s overall goal is to reduce carbon imprints by offering users NFT incentives to burn carbon credits.
Ethereum is the second-largest cryptocurrency by market cap. Its DeFi platform is revolutionary, and many other tokens are based on its blockchain. Ethereum has been burning a quota of on-net transaction fees since 2021. The function is a built-in feature of the EIP-1559 (Ethereum Improvement Proposal) protocol. Ethereum’s burn feature is a token deflationary attribute, helping to keep its inflation rate low, never exceeding 4%.
Terra LUNA Classic (LUNC)
Terra was hard hit by the cryptocurrency crash of May 2022 after a price-stabilizing relationship with UST was adversely affected. Investors took in substantial financial losses, prompting investors and enthusiasts to advocate for a mass burning of LUNA to help it recover the bulk of its market value in the long run.
Although the project’s founder, Do Kwon, was initially not enthused about the idea of burning LUNA, there was little he could do to stop investors from sending tokens to burn addresses. Eventually, he shared a public burn address for the token.
Eventually, LUNA rebranded as LUNC (LUNA classic) after a hard fork. A community-wide vote in September 2022 confirmed LUNC’s status as a crypto-burning, deflationary token. Given this profound shift in LUNC classic’s tokenomics and value policy regarding crypto burning, it is tipped to pump this year, providing excellent value for investors.
MATIC is another promising cryptocurrency with a deflationary, crypto-burn policy. Based on the Ethereum blockchain, Polygon introduced the Ethereum EIP-1559 protocol to its main net in early 2022.
The mechanism enables MATIC burning and improved fee visibility and is guaranteed to increase the token’s value in the coming months. Today, traders can monitor MATIC burning on a publicly-accessible interface. The protocol is estimated to burn 0.27% of MATIC’s total market supply annually.
Crypto-burning projects hold a lot of promise and are sure to be excellent investments for 2022 and the new year. As such, you should hurry to line your wallets with these digital assets. Don’t miss out on such great deals!