What Is the Role of a ‘Treasury’ in Managing a Token’s Inflation Rate?

A protocol's treasury holds a reserve of tokens that can be used for development, grants, or liquidity provision. The treasury plays a critical role in managing inflation by controlling the rate at which these tokens are released into the circulating supply.

A responsible treasury can reduce net inflation by using protocol revenue for token buybacks, or by delaying the release of tokens, thereby managing the supply-side dynamics to support intrinsic value.