This article is from the Piercing FAQ, by Anne Greenblatt with numerous contributions by others.
Dermal punches are designed to remove tissue for biopsy procedures. A
few piercers use dermal punches to create an initially large piercing
in earlobe and ear cartilage.
Some piercers and the Association of Professional Piercers
http://www.piercing.org/app feel that dermal punches are inappropriate
for performing piercings.
Shannon Larratt of the Body Modification Ezine
<http://www.bme.freeq.com> comments on the dermal punch procedure:
"The piercing is made with a dermal punch, usually 2 to 3.5mm
depending on the lobe and the desired effect. A taper is used to
stretch the hole. Since the surface tension is relieved by using a
dermal punch, the stretch is an easy (and large) one. The final
piercing size is usually between 6 and 2 gauge. It is important to
use light (often titanium) jewelry for healing. Healing time is the
same or slightly faster than a standard lobe piercing."
 
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