How Does a Deflationary Mechanism Typically Affect a Token’s Price over Time?

A deflationary mechanism, such as token burning or transaction fees that reduce supply, typically exerts upward pressure on a token's price over the long term. By constantly reducing the total available supply while demand remains constant or increases, the scarcity of the token rises.

This supply-demand imbalance can lead to price appreciation, assuming the project maintains utility and adoption.