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Deflationary Token

[ELM] How To Get Tokens Listed On The Crypto Exchange?

From: Coinverse

Global inflation has reached a 40-year high. This is because goods prices rise much faster than most people’s incomes. This has prompted people worldwide to invest in deflationary assets such as gold, bonds, stocks, bitcoin, etc. But did you know that Bitcoin is also Inflationary!

            Yes, Bitcoin is “technically” inflationary; even gold is “technically” inflationary. All of these are technically inflationary as their supply keeps increasing over time. By “technically,” we refer to the traditional definition here. However, in economic terms, both are “deflationary” as the demand can keep up with the slowly increasing supply. Today we will talk about some indeed/traditionally deflationary assets/tokens. The collection of these tokens decreases over time. So let’s begin without wasting any more time.

INFLATION: Inflation is an increase in the overall price of goods and services in an economy. When the general price level rises, each unit of currency purchases fewer goods and services; thus, inflation corresponds to a loss of money’s purchasing power.

What are Deflationary Tokens?

Deflationary cryptocurrencies or tokens are assets whose supply deflates over time, ensuring that the token price rises even if demand remains constant. Unlike Inflammatory cryptocurrencies (like Bitcoin), new tokens cannot be mined into existence.

            These tokens can be burned in various ways. For instance: Binance exchange burns – destroys – BNB each quarter to reduce its supply. Other methods of lowering supply include burning tokens with every transaction, buyback, etc. As the name suggests, buyback involves the platform purchasing tokens from the holders and transferring them to inaccessible addresses, reducing the supply. Some smart contracts even burn a portion of the transaction fees automatically to decrease supply. Examples of such tokens include XRP(Ripple), Ethereum, etc.

SMART CONTRACTS: Smart contracts are programs or pieces of code stored on a blockchain that run when predetermined conditions are met. They are typically used to automate an agreement’s execution so that all participants can be immediately sure of the outcome without any intermediary’s involvement or time loss. They can also automate a workflow, triggering the following action when conditions are met.

Hybrid Tokens

Some crypto platforms employ a mixture of defamatory, inflammatory, and deflationary mechanics to keep the price in check. For instance, inflammatory tokens (like Bitcoin) set a maximum supply. The supply of such tokens increases until the bar is reached and remains constant, turning into a Deflationaryy token. 

DEFLATIONARYY TOKENS: Deflationaryy tokens are cryptocurrencies with a fixed supply. They are neither inflammatory nor defamatory. NFTs are Deflationaryy assets with the very little or singular collection.

Ethereum(ETH), the native token of the Ethereum blockchain, was once purely an inflationary coin. However, an August 2021 update mandated that some Ethereum must be burned every time the network activity increases. This made the coin deflationary. According to the website Watch the Burn, over 1.7 million ether coins worth up to $4.5 billion have been burned.

 Ripple went a different route to keep its token (XRP) deflationary. First, it issued 100 billion XRPs all at once. Then, in 2017, Ripple stored 55 million of these coins and released them regularly to maintain liquidity.

Furthermore, every time you use XRP, you pay a small transaction fee, which is then burned to keep the coin’s deflationary nature. So, now that we have discussed quite a lot about deflationary tokens, let’s talk about the advantages/benefits of these tokens.

Benefits of Deflationary Tokens

Deflationary tokens have innumerable advantages for both investors and projects. Deflationary tokens are believed to outsmart DeFi and play an essential role in developing the Web3.0 world. Some of the benefits of Deflationary tokens are as follows:

  1. Appreciation in a Coin’s Value: Deflationary cryptocurrencies reduce market supply, increase scarcity, and raise demand. This helps increase the price of the token as the items that are difficult to obtain are more appealing than those that are more readily available. Using the same logic, investors are more attracted to rare coins than plentiful ones.
  2. Increasing Profitability: Deflationary tokens have received much attention during the recent bull run. This factor directly adds to the interests of investors as they earn more money. Another possibility is that a platform decides to buy back users’ coins. Short sellers will profit from the entire process leading to the coin burning. After all, is said and done, the desired result is an increase in value after burning.
  3. Removal of Extras from the market: Unsold tokens in circulation harm a cryptocurrency’s success. Instead of flooding the market, the deflationary mechanism assists a project in removing extra tokens from circulation. Furthermore, if tokens were distributed erroneously, it would be desirable to burn them to repair the error.

Another LYCA SMITH Design!

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