What Is “Monetary Policy” in the Context of a Decentralized Protocol?
Monetary policy in a decentralized protocol refers to the rules and mechanisms governing the supply, issuance, and distribution of the native token. This includes setting inflation/deflation rates, staking rewards, fee structures, and burn mechanisms.
Unlike traditional central banks, a protocol's monetary policy is typically governed by code and changed only through decentralized governance votes.
Glossar
Decentralized Protocol
Protocol ⎊ A decentralized protocol, within the context of cryptocurrency, options trading, and financial derivatives, represents a self-executing set of rules governing interactions and transactions, operating without central intermediary control.
Monetary Policy
Principle ⎊ Cryptocurrency monetary policy refers to the pre-programmed, immutable rules embedded in a protocol that govern the supply, issuance rate, and total cap of the native digital asset.