🧠 Topic: What are inflationary and deflationary tokens, and why sometimes an increase in supply is normal
💸 Inflationary and deflationary tokens are two types of tokenomics that determine how the total number of tokens changes over time.@Cryptoland_88
📈 Inflationary tokens
— The number of tokens increases over time
🔹 Emission → new tokens appear:
• For staking / farming
• For incentives
• In lending
• In DAO voting
🔸 Examples: ETH (before Merge), #sol , DOT, ATOM, AAVE
✅ Pros:
There are rewards for participants
Support for validators, DeFi, stakers
The project's economy is 'alive'
Does not require burning — demand balances itself
⚠️ Cons:
Without demand → pressure on price
Need to monitor real inflation
High emission = bad signal
📉 Deflationary tokens
— The number of tokens decreases over time
🔹 Through burning, locking, buyback
🔸 Examples: $BNB , $ETH (with EIP-1559), $LUNC (partially)
✅ Pros:
Limited supply
Scarcity effect → potential growth
Good for the long term (if there is utility)
⚠️ Cons:
No incentives to hold/use
Demand may not catch up to burn
Sometimes a token 'dies from scarcity'
🤔 Is inflation = bad?
❌ Not always. Example:
#ETH issues tokens, but burns more than it produces
#ATOM — inflation ≈ 10%, but everything goes into staking
📊 It’s not about the 'type', but the balance: demand > emission
📘 What to watch:
🔹 Emission Rate
🔹 Burn Rate
🔹 Staking ratio
🔹 Unlock calendar
🔹 Utility: why is the token needed at all?
🧠 Conclusion:
Inflation is not always the enemy. The main thing is why the token exists, who uses it, and how the project controls the balance between issuance and demand.
If inflation is reasonable — it fuels the economy.
If ignored — it will eat the token’s price.
📖 In the next issue, I will explain: What is tokenomics with limited and unlimited supply — and why 'maximum 21M coins' does not always mean growth.
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