How Does a Token’s Inflation Rate Affect the Real Yield of Staking?

A token's inflation rate directly reduces the real yield of staking. If the staking reward (nominal yield) is 10% and the token inflation rate is 5%, the real yield is only 5%.

Stakers must earn a nominal yield higher than the inflation rate just to maintain their proportional share of the network. High inflation can negate the benefits of staking rewards, leading to a negative real return.