Definition ∞ Scarcity models are economic frameworks that dictate the limited availability of an asset, influencing its value through the interplay of supply and demand. These models define the total supply, issuance rate, and distribution mechanisms, ensuring that the asset’s quantity is controlled. Digital assets often incorporate programmed scarcity to support their value proposition.
Context ∞ Scarcity models are fundamental to understanding the economic underpinnings and price dynamics of many cryptocurrencies. News frequently highlights assets with fixed supply caps or deflationary mechanisms, discussing how these models influence long-term value retention. Changes or debates surrounding a digital asset’s scarcity model can significantly impact investor sentiment and market valuation.
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