How Does a Deflationary Token Model Attempt to Maintain or Increase Value?

A deflationary token model attempts to maintain or increase value by systematically reducing the total or circulating supply of the token over time, creating scarcity. This is often achieved through mechanisms like transaction fees being "burned" (destroyed), or periodic buybacks and burns funded by protocol revenue.

By decreasing the supply while demand remains constant or increases, the model aims to exert upward pressure on the token's price. However, this is not a guarantee of value, as market sentiment and utility are also crucial factors.