Token inflation denotes an increase in the total circulating supply of a specific cryptocurrency or digital token over a period, typically through newly created units. This process is often integrated into a protocol’s design to incentivize network participation, compensate validators, or finance ecosystem development. It significantly impacts the token’s scarcity and value dynamics.
Context
Token inflation is a common topic in crypto news, particularly when analyzing a project’s tokenomics, staking rewards, or long-term economic model. Debates frequently center on appropriate inflation rates, their effect on existing investor holdings, and the balance between network security and sustainability versus potential value dilution for current token holders.
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