Deflationary / Inflationary token
An inflationary token has a supply that grows over a measured period, while a deflationary token has a supply that shrinks over that period.
✦ Key Insight
Supply growth can dilute ownership percentages, while supply contraction can make units scarcer. Neither automatically makes a token good or bad. Readers should examine the reason for issuance or burns and whether incentives support network use.
✕ Common Misconceptions
Do not equate deflation with guaranteed price appreciation or inflation with guaranteed price decline. Also distinguish token supply inflation from changes in consumer-price inflation in a national economy.
Detailed Explanation
In Practice
Dig Deeper
Circulating Supply
The number of tokens currently available to trade, excluding locked, reserved and unissued tokens.
Tokenomics
Tokenomics describes how a crypto token's supply, distribution, incentives, and utility are designed to influence how the token functions over time.
Total Supply
All tokens that currently exist, including locked ones, minus any that have been burned.
Emission schedule
An emission schedule defines how and when new or previously reserved tokens are introduced into circulation.
Burn
A token burn permanently removes tokens from spendable supply according to the token or protocol's rules.