How Does Deflationary Token Work?
What are Deflationary Tokens? A deflationary token is a token model in which a specific percentage of tokens are removed from the market every time a token transfer takes place. Its main objective is to create a demand for a token by decreasing its supply in the market. It prevents the market from being flooded with an excessive supply of tokens. This has made the supply of these tokens remains the same even if the demand increases. Working Mechanism of Deflationary Tokens: The process of burning these tokens is mainly carried out through two different mechanisms. They are as follows, i) Buy Back ii) Burn on transaction Buy Back Mechanism In today’s crypto world, this mechanism is essential to drive up the value of shares in the market. In this Buy back mechanism, a project removes a particular amount of its tokens from the market by sending them to a dead address, thus eliminates those tokens permanently. Later, the same company or the project ...