Progressive scarcity describes a tokenomics model where the rate at which new tokens are introduced into circulation gradually decreases over time. This design choice aims to create a steadily diminishing supply growth, leading to increased scarcity of the asset. Bitcoin’s halving mechanism is a prominent example, where block rewards are periodically reduced. The intention is often to preserve or enhance the token’s long-term value.
Context
Progressive scarcity is a frequently discussed concept in crypto news when analyzing the long-term value propositions and inflationary pressures of various digital assets. A key consideration involves how predictable supply reductions influence market psychology and investment strategies. Future token designs may incorporate more dynamic or adaptive scarcity mechanisms that respond to network usage or other economic indicators. Understanding this principle is fundamental for evaluating the economic models of many cryptocurrencies.
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