Why is the #Pi inflation such a major concern?
Contd from Previous post.
and 362.99 million was unlocked, locked supply grew by 104.41%, and unlocked supply surged by 132.44% over one year. Whichever way you view it, this pace of supply growth is unsustainable
Inflation dilutes value. When the supply of an asset increases too rapidly without a matching increase in demand, it loses its value over time.
Simply put, Pi’s rapidly growing supply means each new token is worth less than the one before it, assuming demand doesn’t rise proportionately.
If the circulating supply of Pi increases from 4 billion today to 8 billion tomorrow, but the demand from individuals or businesses remains unchanged, each Pi will lose buying power. Consequently, Pi holders will see their holdings’ value decrease simply because there are more Pi tokens in circulation.
Moderate inflation isn’t necessarily harmful; it can keep the economy dynamic and even reward those who maintain the network. But what Pi is experiencing goes far beyond “healthy inflation.” It’s expanding at a pace that appears to undermine the token’s value.
The whitepaper mentions that Pi Network is capped at 100 billion tokens. Here’s where it gets even more alarming—the whitepaper itself acknowledges the likelihood of further inflation:
Where Does Inflation in Pi Originate From?
The inflation in Pi primarily stems from its mining rewards. Pi’s reward system is based on several variables:
Base Mining Rate (B), which is dynamically adjusted;
Lockup Reward (L);
Security Circle Reward (S);
Referral Team Reward (E);
Node Reward (N);
App Usage Reward (A);
Future Contributions (X).
The primary concern here is the Base Mining Rate (B). Calculating B independently is a complex undertaking, as it involves network-wide data that isn’t publicly accessible, like the total Pi mined by all users the previous day and the total of all active users’ mining coefficients.
