How Does “Staking” Impact a Token’s Supply and Demand?

Staking involves locking up tokens to secure a network or earn rewards. This action immediately reduces the circulating supply, which increases scarcity and boosts demand.

The rewards paid to stakers, however, introduce new tokens, which is an inflationary pressure. A well-designed staking mechanism balances these forces, incentivizing holding and network participation.

It is a key part of Proof-of-Stake.