Image: Chris Rhoads

On the 20th of October, 2023, Uniswap Founder, Hayden Adams announced via a tweet that he has burnt 99% of Haycoin supply worth around $650m. This caused the price of Haycoin (now trading worth around $2.3 million at the time of writing) to surge to a mind-blowing value of $5.5 million per token for the remaining 4.4 tokens. (See chart on dextools).

What is Haycoin and why did Adams decide to burn it all?

Adams, according to a post via X (formerly Twitter) stated thus:

“ Over the years, a few people have noticed it and bought it as a joke/for the novelty of it.

Was extremely surprised to see people buying and selling significant dollar amounts this past week, treating it like a memecoin. Crypto can be weird sometimes.

Ultimately, I’m uncomfortable owning almost the entire supply (~99.99%) of a token that people are memeing and speculating on, so I decided to burn the full amount in my wallet (”valued” at an absurd ~$650b).

To be extremely clear, I will have no future involvement, have burned all the HAY in my wallet, and think speculating on it is silly. Also prefer a new logo that is not my PFP - ultimately if my photo is used in this way I may consider image takedowns “

Though the nature of this event caused a frenzy in the crypto space, the burning of tokens is not an unusual phenomenon. For example, Binance, the world’s leading centralized exchange (CEx) engages in a quarterly burning of its native token, BNB based on its trading volumes with the main aim of burning half of its total supply (100 million BNB). Earlier this month, its 25th quarterly burn was completed, permanently removing 2.14m BNB (approximately 453m USD) and 1.3% of supply from circulation.

Token Burning is simply permanently removing a certain number of tokens or crypto from circulation. Yes, “burning” means completely destroying these tokens.

Are these tokens set ablaze? How are tokens “burnt”?

image: Gabriel Meinert

No, tokens cannot be “set ablaze”, there’s no matchstick and petrol in the blockchain. Tokens are burnt by sending them to a BURNER WALLET address. These special types of wallets CAN ONLY receive tokens but are UNABLE to send out any tokens received. Examples of these addresses are; 0x000000000000000000000000000000000000dEaD and 0x000000000000000000000000000000000000dEaD.

There are several reasons why most blockchain companies engage in token-burning events. These reasons include; creating scarcity and thereby increasing the value of the token, reducing price volatility, and complying with regulations amongst others.

Token burning can have significant impacts on the value, supply, and demand of a token. Haycoin is one of the latest examples. While some may see Adam’s action as a waste of money or a publicity stunt, others may appreciate the honesty and integrity of Adams, who chose to burn his tokens rather than sell them for profit, distancing himself from the memecoin craze and avoiding any legal or ethical issue.