How Does a Deflationary Model Affect the Incentive for Long-Term Holding?

A deflationary model, especially one with a fixed or burning supply, increases the incentive for long-term holding because the token's scarcity is guaranteed to increase over time. Holders are incentivized to keep their tokens off the market, expecting their share of the network's value to appreciate due to the shrinking supply.

This contrasts with inflationary models, which incentivize spending or staking to offset dilution.