What Is a Deflationary Token Model and How Does It Work?
A deflationary token model is designed to reduce the total or circulating supply of tokens over time, typically through mechanisms like transaction fee burning or buybacks. This continuous reduction aims to increase the scarcity of the token, potentially driving up its price over the long term.
Glossar
Transaction Fee Burning
Mechanism ⎊ Transaction Fee Burning represents a deflationary economic model integral to several blockchain protocols, notably Ethereum, where a portion of the fees associated with network transactions are intentionally removed from circulation.
Deflationary
Concept ⎊ A Deflationary asset exhibits a supply schedule where the total circulating quantity is designed to decrease over time, often through mechanisms like token burning or fixed caps.
Deflationary Token
Mechanism ⎊ A Deflationary Token is a digital asset designed with an intrinsic mechanism to perpetually reduce its total circulating supply over time.
Deflationary Token Model
Mechanism ⎊ A deflationary token model, within cryptocurrency and derivatives, introduces a diminishing supply schedule, typically through burn mechanisms or transaction fees redistributed to reduce circulating tokens.