Burn / Burning

Burning is the permanent destruction of tokens. A smart contract runs a burn function that removes tokens from an address and reduces the token's total supply, taking them out of circulation for good. It is the mirror image of minting, which creates new tokens. Burned tokens are gone; they are not sent to a person but removed from the ledger (or to an address no one controls).

For real-world assets, burning is how ownership is retired. When an investor exercises a redemption - handing back tokens in exchange for the underlying value - the issuer burns the returned tokens so the supply drops to match the shares or units still outstanding. A tokenized Treasury fund burns fund tokens as investors cash out, keeping the token supply aligned with assets under management.

The same logic applies to stablecoins. An issuer mints tokens when dollars come in and burns them when dollars are redeemed, so the circulating supply tracks the reserves backing it. Burning is therefore essential to keeping an asset-backed token honest: supply should fall when the claim behind it is extinguished.

Like minting, the authority to burn is a tightly controlled permission. In a regulated security token, only the issuer or an authorized agent can burn, enforced by a role in the contract. Some standards also allow an agent to burn and reissue tokens to recover a holder's position after a lost key or a court order, as part of lawful recovery.

Not all burning signals redemption. Some projects burn tokens to reduce supply deliberately, but for RWAs the meaningful use is retiring tokens whose underlying claim has been paid out or closed.

Source: Ethereum docs (ethereum.org), as of 2026.