The news is out: HTX DAO incinerated 11.79 trillion $HTX tokens, a cool $22.17 million up in smoke (or, more accurately, permanently locked away on the blockchain) on July 15, 2025. They refer to it as a deflationary strategy, a decision to increase the value of what remains. Before we all uncritically cheer another token burn, let's ask a very important question: are we sure this isn't just rearranging deck chairs on the Titanic?
Is Deflation Always The Answer?
Token burns, much like stock buybacks in the legacy finance sphere, are often framed as unambiguously positive. Fewer vessels available while demand stays the same means price is going to increase, correct? Simple economics. Except it doesn’t work like that in reality, does it?
Think about it. If a company continues repurchasing its stock, on an increasing basis, year after year, wouldn’t you eventually start to ask questions? Why are they pushing for this instead of investing in innovation, their own R&D, or any real economic growth? Or are they just attempting to pump up the stock value? They could be doing it to maintain short-term shareholder return expectations, but this risks long-term opportunity.
The same logic applies here. HTX DAO has burned an estimated 72.76 trillion $HTX tokens since Q1 2024—over $136 million. That's a lot of capital. You’ll be in a better position to use that capital to acquire new customers and develop superior products. Who knows, maybe you’ll find you can decentralize your operations even further!
Instead, they're relying on a deflationary mechanism to "create a more stable and valuable token." Stability isn't just about price. Utility and adoption are the two biggest drivers. They must have a legitimate purpose to want to possess the token, instead of simply wishing for its value to rise due to its limited supply.
What happens when the burns stop? What's the long-term plan beyond artificial scarcity? That should be a good question to ask yourself before investing any of your dollars.
Reduced Liquidity: A Hidden Danger?
One of the most dangerous and overlooked side effects of token burns is diminished liquidity. In theory, a higher price for $HTX tokens is good. If it’s all the same, except it’s harder to purchase and sell them without moving the price a lot, are we really better off? A shallow market with low liquidity can be easily manipulated, creating extreme price volatility and putting long-term investor confidence at risk.
Picture yourself trying to sell a major position in $HTX after this burn. Otherwise, you could end up facing an uphill battle to locate anyone willing to pay what you want, leaving you permanently stuck in your investment. Could that be the “stable and valuable token” HTX DAO is striving for? I highly doubt it.
A vibrant, liquid market is often a sign of a healthy project. It’s a signal that there’s real demand across all of those different types of players. Artificially constricting supply can create a mirage of value, covering up the cracks and flaws in the ecosystem.
Signaling Strength or Financial Distress?
This is where things get really interesting. Token burns are sometimes marketed as an indication of financial health. "Look how much we can afford to burn! We're swimming in profits!" What if it's the opposite?
What if that $22 million burn means that HTX DAO is failing to produce value? Or it might be a symptom of more difficult times to come. What if they're resorting to token burns because their platform revenue – 50% of which is used for these burns – isn't growing as quickly as they'd hoped?
It’s similar to a failing company that continues to pay out an enormous dividend while their sales plummet. While that could be a win in the short term, it should concern anyone interested in the company’s long-term prospects. Or are they favoring immediate profits at the expense of long-term prosperity? Are they trying to mask deeper problems?
Now, HTX DAO is advocating for more decentralized governance such as adding a new listing recommendation submission channel. That's commendable. They are even distributing 10 billion $HTX for everyone to join in on the fun. Is it enough? What if these initiatives weren’t truly empowering the community? Or are they merely window dressing intended to mislead us away from the opaque underlying value proposition of $HTX? The plan is to create a “Free Financial Port." In order to do this, the project needs to prove through attracting and keeping users that it has utility that’s real and not just based on token scarcity.
Ultimately, the success of HTX DAO's $22 million burn – and future burns – will depend on whether they can build a thriving ecosystem around $HTX. If they’ve succeeded, then the burns will look like a clever, preemptive tactical maneuver. Otherwise, they’ll live on as a costly bet that never quite paid off.
