While burning a financial asset might sound extreme, doing so in the crypto industry with tokens is a fairly common practice.
Token burning is a strategy deployed by some projects to support the price of a token in the market or to counteract inflation. By burning tokens, they are being permanently removed from circulation.
While the major cryptocurrencies such as Bitcoin and Ethereum don’t have any form of token burning, many strong Altcoins use it, especially in the DeFi sector.
Tokens are burnt by sending them to a wallet address that can only receive coins, effectively removing those tokens from ever being traded on the market again. These addresses are sometimes referred to as "burn" or "dead" addresses. These addresses do not have a private key, meaning no one can access them, and the tokens are gone forever.
In the case of MAXX Finance, our smart contract will be burning tokens by sending them to the 0x00...00dEaD address on the Polygon Network.
As they are removed from the circulating supply, both the Circulating and Total Supply numbers reduce to reflect the new totals.
In our case, it will mainly be to counterbalance token inflation. Many tokens suffer from runaway inflation, where they mint far too many tokens which just devalues the project. Keeping inflation in check is key to longevity of any project that doesn't have a fixed supply.
As we are offering a fairly high APY to stakers, the total supply of MAXX will increase over time due to the new tokens minted to pay interest.
We cannot really estimate or guarantee how much inflation the token will have as a whole, as this depends heavily on staking behavior. See Inflation for a better understanding of why this is.
Of, course we do know the maximum possible inflation rate. But that would be based on every single user staking for the maximum duration, which is highly unlikely to happen.
So in order to counteract some of the inflation, we can introduce features to the ecosystem that burn some of the tokens, therefore deflating the supply.
We do this mainly through buy and sell taxes, but may also have burn events where a portion of the MAXX tokens in the vault will be burned.
Of course! Every single burn of MAXX tokens will be visible on the blockchain, and they will be accumulating in the 0x00...0000 address on the Polygon Network.
We will also have statistics available throughout our ecosystem. You can see the total here: https://app.maxx.finance/stake