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Author Topic: Why lot of Ico was burning the unsold tokens what that means?  (Read 124 times)
Rameshvijay45
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September 11, 2018, 02:51:25 PM
 #1

I was watched in some new ICO projects they are telling unsold tokens are burned why they are burning what's the reason And what the use of burning the tokens? Please tell friends
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pawel7777
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September 11, 2018, 03:21:55 PM
 #2


I'm not very much into ICOs and don't expect it's a common practice, but the reason for burning would be protection of the buyers interest. Example:

- ICO plan to create 1 million tokens and sell them for $1 each
- Developers intend to keep 10% (100k) for themselves, rest is up for sale
- ICO turns out not very successful selling only 200k tokens, so there's 700k left.

Now, it would be horribly unfair for those who paid $ for their tokens to give away the leftover tokens for free, and it's also unfair if the developers kept that 700k. The only sensible way that doesn't screw the investors over is to destroy unsold tokens.

Not quite sure how burning process looks for ERC20 tokens (perhaps you could deactivate those on smart contract level) but with Bitcoin, burning means sending coins to an address that no one have control over, such as this one for example: https://www.blockchain.com/btc/address/1BitcoinEaterAddressDontSendf59kuE


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shashikamal
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September 11, 2018, 03:37:21 PM
 #3

Many projects are used to burning unsold coins as they need to get more attraction for the project from investors as well as if the project owners decides to do so. Burning coins means reducing the total supply of the project. The benefit of burning coins will be to hype the project in the future. Due to this burning the price of a coin can increase & it will give more benefit for investors. Also must ass to your knowledge that some of the ICOS are using this trick to attract new investors to their project. But majority of the projects whom do so is not genuine. Beware of such projects if you are planing to invest.

jfelix
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September 11, 2018, 05:25:23 PM
 #4

Burning unsold tokens is a way to reduce supply and at the same time keep the price from falling
nakamura12
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September 11, 2018, 05:47:45 PM
 #5

Burning unsold tokens is a way to reduce supply and at the same time keep the price from falling
You also got a point there, unsold token is the same as priceless or no value tokens that's why they will burn the unsold tokens.

m.roth
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September 11, 2018, 08:12:56 PM
 #6

There is also the possibility to airdrop them (not talkin about giving away a little amount of tokens to the community). To maximize the investors value, unsold tokens can be distributed to them in relation to their investment. Since the founders and the team usually get a fixed amount of tokens, this increases their relative share.

https://medium.com/@FundFantasy/unsold-tokens-keep-burn-or-airdrop-them-part-2-c2d9305f94e9

of course it decreases the value for the founders and team, which is more pronounced when only a small part of the total amount of tokens is sold. One could complicate things and implement like a linear function and make it fair for both the investor and the founders and team? Should one party be rewarded to a greater extent? The ones taking the risk in times when trust in ICOs is low? Or the founders, BECAUSE THEY ARE THE FOUNDERS?
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September 12, 2018, 07:36:30 AM
 #7

Burning unsold tokens is a way to reduce supply and at the same time keep the price from falling

I agree some ICO's do it expecting an increase on price yet normally they are doing it to secure and protect the investors. If burning isn't done like for an occurrence just 20 % of the total supply was sold in all most likely the token price will fall and burning should be done, 80% unsold tokens is huge what if developers will dump it. It should be done to preserve trust. Well this is just my opinion  Wink

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September 12, 2018, 01:55:10 PM
 #8

burning tokens mean canceling those tokens, so they are sent to addresses that nobody can get to their private key "0x000000000000000000000000000000000000cEaB" or burn them "using .burn() script".
The primary objective of this process is economic hedges, which reduce the quantity offered to control the price, as the supply will lead to a significant reduction in cost if there is no demand.

I do not advise you to join a campaign if the total number of tokes is large.

Read more:

[1] The token burn mechanism explained
[2] What Is Coin Burn In Cryptocurrency: A Guide For Investors

vladimirhf
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September 14, 2018, 02:45:05 AM
 #9

I was watched in some new ICO projects they are telling unsold tokens are burned why they are burning what's the reason And what the use of burning the tokens? Please tell friends

supply x coin/token price = market cap.
if the supply decreases, the price goes up.

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September 14, 2018, 03:35:21 AM
 #10

I was watched in some new ICO projects they are telling unsold tokens are burned why they are burning what's the reason And what the use of burning the tokens? Please tell friends

supply x coin/token price = market cap.
if the supply decreases, the price goes up.

not necessarily. although supply plays a role in the price but its going down doesn't have to mean price rise. and also it has nothing to do with the market capitalization and how it is calculated. the price only goes up if there is more demand. usually these token burnings can create hype and lead to a pump but you can not call a pump a price rise it is temporary and fake.

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September 14, 2018, 06:05:42 AM
 #11

Mostly because they are unable to sell all their intended tokens marked for public sale. ICO scene is not very good this year. Even most of the good one's are unable to reach hard cap. Many have extended their timeline, still couldn't find any buyers. Only option left is to burn the tokens.

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September 14, 2018, 06:41:03 AM
 #12

It's a good thing and it's of benefit to the investors, token burn will reduce the total supply which creates artificial scarcity and inturn price gets higher.

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September 14, 2018, 09:52:29 AM
 #13

It's a good thing and it's of benefit to the investors, token burn will reduce the total supply which creates artificial scarcity and inturn price gets higher.
Right.

They do burn tokens with the believe it will benefit their investors and the developers as well. This is an application of law of supply and demand.














 

 

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