Inflation is a favorite antagonist in the cryptocurrency community. Most investors are probably familiar with the graphs showing how much value the U.S. dollar has lost since 1933, when the Federal Reserve left the gold standard. For hard-money advocates, the deflationary properties of gold or cryptocurrencies form a built-in guarantee of long-term value.
Bitcoin’s supply is algorithmatically limited to 21 million tokens, but it still experiences inflation as the token supply grows. For most cryptocurrencies, inflation is barely noticeable against the backdrop of everyday price volatility, but it is very commonplace – blockchain networks need to generate new tokens to reward mining or staking nodes.
But any currency will lose value if supply exceeds demand. As such, many cryptocurrencies combat inflation by destroying tokens. Ripple’s XRP burns a small number of tokens with every transaction, and some, like Binance Coin, intentionally burn tokens to raise prices.
Some new tokens take coin burning to an extreme, and cause their token supply to shrink over time. This following tokens are known as Deflationary Tokens. What is Deflationary Token? Let’s take a look at this explanation.
Traditional cryptocurrencies tend to have a large circulating supply which makes it difficult for the price to increase as the market cap would be unrealistically high.
Deflationary cryptocurrencies, on the other hand, usually have a much lower initial supply and a percentage of tokens is burned with every transaction. The theory is that less supply will lead to higher demand.
It’s quite a new concept but it’s already proving to be successful. Just take a look at the following graph for Bomb Token (the first deflationary token with an initial supply of 1,000,000 tokens and a 1% burn rate) which went from $0.33 to over $13 after 4 months.
Airdrop (30%): 300,000 SMASH Tokens will be made available through airdrop programs.
Bounty (20%): 200,000 SMASH Tokens will be made available through bounty campaign.
Investors & Exchange Listing (20%): 200,000 SMASH Tokens will be available for purchased and future exchange listing.
DApp & Marketing (10%); 100,000 SMASH Tokens will be used to DAPP Development & Marketing.
Team (10%): The team will keep 100,000 SMASH Tokens, locked for 6 months.
Medium Page: https://medium.com/@smashtoken