How Does the Inflation Rate of Staking Rewards Affect the Token’s Intrinsic Value?

The inflation rate of staking rewards represents the cost of securing the network. If the inflation rate is too high, the dilution of existing token holders' value can outweigh the benefit of network security, leading to a decrease in intrinsic value.

A sustainable model balances the inflation necessary for security with the network's fee revenue, aiming for a "real yield" (yield after inflation) that is positive, which is necessary to incentivize long-term holding.