In most “buyback-and-burn” token models, a network generates income in one
currency token and uses the proceeds to buy-back and “burn” its own native
token. The intent is to grow token value by reducing its supply as income
grows. Buybacks tend to accomplish that goal, but burning affects currency
and capital assets in different ways. When it comes to money, reducing the
supply does theoretically increase the unit value of currency assets. But
when it comes to capital assets like governance tokens, issuance is key to
capitalization and burning can get in the way of growing fundamental value.

Article posted 1 year ago