What’s the best way to make massive gains in crypto? This is a burning question you’ve probably asked yourself before, and there are a variety of answers depending on the person you ask.
Some people will tell you trading is best, “buy low, sell high.” It's easy, right? Well, the fact of the matter is that trading is extremely difficult and 95% of traders end up losing, not gaining.
Other people will say to get in early, identify new projects in their earliest stages so that you stand to profit hugely when they succeed. Again, this is also extremely difficult. There’s so much uncertainty with new projects and they’re difficult to identify.
Some people say to invest in cryptos with staking rewards, masternodes, or ones that pay dividends. While these can be good, staking, rewards, and dividends don’t necessarily push up a token’s price.
Finally, one of the most common ways people say is to simply buy and hold, ‘hodl’. This strategy works if you hodl the right coins and have time on your side. It’s also the easiest and is widely considered the best strategy with the greatest returns on investment.
Now, if you take the hodler strategy and refine it by hodling coins with novel token burning mechanisms, it can be very powerful. If you don’t really know what token burning is, be sure to check out my last article where I thoroughly explain token burning mechanisms.
For the remainder of this piece, I dive into 8 crypto projects with burning mechanisms that should be in your hodler portfolio.
1. Binace Coin (BNB)
Binance Coin (BNB) is the native cryptocurrency (token) of Binance, the world’s largest cryptocurrency exchange by trading volume. It is primarily used as a utility token within the Binance ecosystem, allowing users to receive discounts when paying their trading fees with BNB.
Binance has implemented a quarterly burning mechanism into BNB, where the exchange uses 20% of its quarterly profits to repurchase and then burn BNB tokens. They have vowed to do this until 50% of BNB’s total supply (100 million BNB tokens) are repurchased and burned. The primary reason for burning BNB tokens is to reduce the coin’s total supply and increase its price.
- Source: www.binance.vision
Thus far, the exchange has conducted 9 quarterly BNB token burns resulting in 14,525,153 BNB burned, equating to $170,000,000 USD in value. Every BNB token burn is verifiable and transparent as you can track the burn transaction on the Binance Chain explorer.
- Source: www.explorer.binance.org
Reason for Burning: Buy-Back
Official Website: www.binance.com
Ripple’s XRP token aims to be a digital asset for global payments. The XRP token is used in RippleNet’s payment products which offer financial institutions a fast and low-cost option for sourcing liquidity in cross-border payments. Additionally, XRP can be used for micropayments, e-commerce, exchanges, and peer-to-peer services.
Ripple has implemented a unique burning mechanism into XRP whereas tokens are burned gradually with each transaction. When transacting XRP, there is a small fee paid in XRP that is automatically burned. This burning mechanism acts to safeguard against DDOS attacks and prevent spam transactions from bloating the network.
As seen from the image above, the current burn rate is 11,123 XRP per day or 4,060,149 XRP per year. Every time an XRP transaction is sent, the 0.00001 XRP fee is burned and supply is depleted. The burn-rate of XRP per-day will accelerate with increasing transaction volume on the network.
Reason for Burning: Burning on Transaction
Official Website: www.ripple.com/xrp
3. Factom (FCT)
Factom is a decentralized enterprise-grade blockchain protocol for the integrity of data. It acts as an encrypted, immutable directory where important data can be stored and transferred securely. Factoids (FCT) are the native cryptocurrency coins used by the Factom blockchain network.
The Factom protocol utilizes a dual token system in which FCT is used to buy Entry Credits (EC) and then burned, it’s a burn-and-mint equilibrium. Additionally, FCT tokens can also be converted ‘burned’ into PEG – the native cryptocurrency of PegNet – a new stablecoin 4.0 network built on top of Factom.
- Source: www.factoshi.io/factoids
In the Factoid (FCT) burn chart above, you can see that FCT burning has increased significantly as of late. This is due to the recent launch of PegNet in October, where large amounts of FCT are now being converted ‘burned’ into PEG tokens. PegNet is growing at an unprecedented rate with a market cap already over $1M and a hash rate growing 100x since launch. To date, 363,960.48 FCT have already been burned and converted into PEG.
Reason for Burning: Burn-And-Mint
Official Website: www.factomprotocol.org
4. Kyber Network (KNC)
Kyber Network is an on-chain liquidity protocol that allows users to swap ERC-20 tokens in a decentralized manner through its liquidity providers. KNC is the network’s native cryptocurrency and it’s used to pay transaction fees when users swap tokens on the network. The project is
Every time a token is swapped on the Kyber Network, a portion of the fees paid in KNC is burned and removed from the token's total supply. Therefore, KNC’s burning mechanism reduces the token’s total and circulating supply.
- Source: www.tracker.kyber.network
As of Nov 22, 2019, more than 4 million KNC have been collected in fees and over 3 million KNC tokens have been burned – removed from the total supply and circulation forever.
- Source: www.tracker.kyber.network
As seen from the chart above, the amount of KNC being burnt is steadily climbing. This is due to the network’s significant growth and shows that Kyber Network is a real project with real usage.
Reason for Burning: Fee Burning
Official Website: www.kyber.network
5. MakerDAO (MKR)
MakerDAO is probably the most important project built on Ethereum and is the leading DeFi protocol with more than $300 million worth of ETH deposited in MakerDAO. The protocol is built on top of the Ethereum blockchain and it backs and stabilizes the value of its decentralized stablecoin DAI through a dynamic system of Collateralized Debt Positions (CDP) and a novel governance system.
- Source: www.defipulse.com
The Maker protocol utilizes a unique burning mechanism where MKR tokens are used to pay stability fees to the system and are then burned from circulation forever. In other words, when people create a CDP with Maker by putting ETH, BAT, or other supported crypto as collateral to take out DAI, they have to pay stability fees using MKR to the system. These fees are then burned and the capped 1 million MKR supply is forever reduced.
Unlike Binance’s burning mechanism, Maker doesn’t buy back its MKR tokens but rather burns them on the ago as the system needs to cover stability fees.
- Source: www.makerburn.com
As seen from the screen capture above, nearly $5 million in stability fees are owed to the system and 5,455 MKR tokens have been burned thus far. The annual MKR token burn rate is currently 9,715 MKR per year, meaning the total MKR supply is shrinking by 9,715 MKR tokens per annum. It should also be noted that this rate is expected to increase as the MakerDAO protocol grows even more popular.
Reason for Burning: Fee Burning
Official Website: www.makerdao.com
6. Huobi Token (HT)
Huobi Token (HT) is the exchanged-based token of the Huobi cryptocurrency exchange and is primarily used as a utility token within the Huobi ecosystem. People can use HT to purchase monthly VIP status plans which reduce exchange trading fees and holders of HT can vote on exchange decisions, gain early access to Huobi events, receive rewards from quarterly buybacks, and trade HT with other cryptocurrencies.
Huobi has implemented a quarterly HT buyback program where Huobi’s exchange arms’ Huobi Global and Huobi DM spend 20% of its quarterly revenues on repurchasing HT tokens at the market rate and burning them from the total supply and circulation forever.
- Source: www.huobiglobal.zendesk.com
As seen from the image above, Huobi maintains complete transparency with their HT token burns and allows anyone to track and verify the HT token burns by viewing the transaction details at Etherscan.io. Thus far, Huobi has held 19 HT token burns equating to a total of 33.5883 million HT burned from the total supply and circulation forever.
Reason for Burning: Buy-Back
Official Website: www.huobi.com
7. KuCoin (KCS)
KuCoin Shares (KCS) is an exchange-based token utilized on the KuCoin cryptocurrency exchange. Like other exchange-based tokens, KCS holders benefit from discounted trading fees as well as rewards in the form of dividends. The exchange shares 50% of its overall trading fee revenue with KCS holders who lock up their tokens.
Like many other exchange-based tokens, KuCoin has implemented a burning mechanism for its KCS token. However, unlike other exchange token burns which use a buyback program where tokens are repurchased with a portion of the exchange’s trading fee revenue, KuCoin simply burns the same number of KCS based on the number of total KCS locked by all users.
- Source: www.kucoin.com/news
KuCoin implemented its first KCS token burn on August 26, 2019, where a total of 500,000 KCS tokens were burned. Now, the current total supply of KuCoin Shares is 172,363,551 KCS and the circulating supply is 82,363,551 KCS.
Reason for Burning: To increase the market potential of KCS
Official Website: www.kucoin.com
8. Unus Sed Leo (LEO)
Unus Sed Leo (LEO) is the exchange utility token at the heart of the iFinex ecosystem and is currently utilized on the Bitfinex cryptocurrency exchange. Traders on Bitfinex can use LEO to pay for various fees including trading, lending, deposit and withdrawal fees to receive discounts.
As well, the more LEO tokens a user holds, the greater the discounts on fees.
iFinex has implemented various burning mechanisms for their LEO token. For instance, if iFinex recovers the $850 million in lost funds from Crypto Capital or the $73 million from the Bitfinex hack in 2016, they will use these funds to buyback LEO tokens and burn them. Bitfinex will also burn LEO tokens used to pay for trading, lending, deposit, and withdrawal fees. Lastly, iFinex will buyback and burn LEO tokens with a minimum of 27% of the firm's consolidated gross revenues. The buybacks and token burning will continue until all 100% of LEO tokens are burned.
- Source: www.leo.bitfinex.com
Currently, the total supply of Unus Sed Leo is 991,091,717.90 LEO and a total of 8,908,282.10 LEO tokens have been burned. As you can see from the numbers and the charts above, quite a significant amount of LEO tokens are burned on a daily basis.
Reason for Burning: Buy-Back/Fee Burning
Official Website: www.bitfinex.com
Each of the above-listed cryptocurrencies has lucrative token burning mechanisms that should significantly impact their token’s price.
Whether tokens are repurchased and then burned or periodically burned through an algorithmic burning mechanism, the end result is the same – the token supply is forever reduced and if the token has utility and demand, the price increases as a result.
Therefore, cryptocurrencies with novel burning mechanisms should be in every hodlers portfolio. It makes hodling that much easier.
What do you think about the cryptocurrencies and their burning mechanisms listed here? Which one do you think will perform best in the long term?
Let me know in the comment section below.