- SafeMoon; BabyDoge; SafeMars and others BSC tokens
- pSAFEMOON; FEGtoken; SafeMoon Inu and others ETH tokens
- Ferrum; WOLF and other Polygon tokens
- Statera; BOMB and other Fantom tokens
At first, it may seem that there is something wrong with an app or even worse that someone compromised your wallet, but the burn-on transaction model is incorporated into the smart contract itself. These deflationary tokens collect a tax on every on-chain transaction. Therefore, a percentage of total tokens will be deducted every time a transaction is made causing a reduction of your tokens.
The burning mechanism improves the value of tokens because they are constantly being removed from circulation while demand remains consistent over time. According to SafeMoon Burn, the SafeMoon team removes about 142 million tokens from circulation every minute, which is 42% of the total supply that has been burnt. This causes a supply shock for the token and benefits the holders in the long run due to scarcity.
The token entity buys back a number of their tokens from the public and sends them to a dead address. This process removes a certain circulation of tokens from the market, thus “burning” them. The supply is reduced and demand increases due to scarcity causing the price of the token to increase. The tokenomics model is adopted by huge names, such as BNB, FTT, and PancakeSwap.
Binance Coin (BNB) has a quarterly buy-back and burn mechanism implemented in its model, making it one of the largest deflationary tokens. On the day of writing this article, we are celebrating 18th BNB burn. A total of 1,684,387.11 BNB was removed from circulation, making a BNB a valuable asset to hold over time.
To conclude, it is vital that you DYOR before purchasing the token and research their tokenomics in detail, as you might find out that your token is deflationary. We established the reason why your token decreases are deflationary token mechanics. Overall, deflationary tokens contain a process that allows a reduction of the circulating supply of a token, such as a burn-on transaction or a buy-back and burns event.