How Does Token Inflation Affect the Relationship between Circulating and Total Supply?
Token inflation, where new tokens are continually minted, causes the circulating supply to increase over time, moving closer to or exceeding the total supply (if the total supply is uncapped). Inflation continuously dilutes the value of existing tokens, which can negatively impact the token price unless the rate of adoption and utility growth outpaces the inflation rate.
Glossar
Total Supply
Circulation ⎊ Total Supply within cryptocurrency defines the amount of a given token or coin currently available to the public for trading and use, representing a critical metric for assessing market capitalization and potential price dynamics.
Token Inflation
Dilution ⎊ Token inflation, within cryptocurrency and derivative markets, represents an increase in circulating supply exceeding demand, consequently diminishing the relative value of each token held.