Deflationary cryptocurrencies are becoming increasingly important in the market due to their tendency to grow despite the contingencies that the market may experience.
Below we present those that are currently trending and review the most interesting aspects of this type of cryptocurrency that are so attractive to investors.
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These are the deflationary cryptocurrencies in trend
- PlayDoge – The game in which Doge is the mascot
- WienerAI – The intelligent dachshund
- Sealana – Solana’s lazy seal
- Base Dawgz – The new memecoin of the Base network
- Mega Dice Token – The casino within reach of a token
- 99Bitcoin -The token to learn by earning
- Sponge V2 – The new improved Sponge
- eTukTuk – The token that changes mobility
Deflationary cryptocurrencies What is this?
Traditionally, when we talk about deflation, we are referring to the general decrease in prices of goods and services offered in the market. In the case of cryptocurrencies, the term deflation is associated with the progressive decrease in the supply of tokens over time.
Therefore, the so-called deflationary cryptocurrencies are those whose tokenomics are designed to limit supply and reduce supply, with the aim of boosting demand and promoting scarcity that enhances their value.
This is why any cryptocurrency whose availability in the market progressively decreases to a predetermined amount of tokens, as is the case with Bitcoin, to take just one example, is classified as deflationary.
However, limited supply is not the only characteristic that defines the deflationary category of a cryptocurrency, because even with a finite supply, the circulating supply tends to constantly increase due to its permanent production or scheduled release to the market.
In fact, for many analysts, cryptocurrencies with finite supply will be deflationary the moment the supply runs out, but as long as the available supply continues to increase, they classify them as inflationary and this makes them very skeptical about the projections of a sustained increase in their price over time. short or medium term.
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Characteristics of deflationary cryptocurrencies
All the cryptocurrencies that make up this category share characteristics both in their design and in their market behavior, among which the following stand out:
Inelastic supply
It is the appropriate term to express that the supply of a deflationary cryptocurrency does not respond to a large extent to the increase in demand or is modified in a very attenuated way by the variation in price at a given time, due to the restrictions or programming to which it is subject. is subdued.
Mechanisms to limit supply
Limited supply, token burning, halvings, and others are mechanisms that can be defined in your protocol or incorporated into it in the quest to limit the available supply and avoid depreciation over time.
Constant reduction in supply
In this type of cryptocurrency, the supply tends to decrease in the long term as a consequence of the limited supply, but it also does so in the short and medium term due to the different mechanisms that are used to reduce the available supply, which at certain times can exceed demand.
High growth potential
By design, they incorporate a high growth potential, due to their tendency to become scarce over time. However, the increase in its market value is due to many factors and among them, the determining factor is always the maintenance or increase in demand.
They encourage possession
Induced scarcity is a factor that contributes to adding value to deflationary tokens, which tends to increase the interest of holders in accumulating higher positions in the expectation of future price increases. This is the typical case of Bitcoin.
Volatility mitigation
All cryptocurrencies are volatile due to their nature as cryptographic assets, however deflationary mechanisms function as mitigating elements of exaggerated price fluctuation, contributing to their stability.
The reduction in supply in combination with the maintenance or increase in demand acts as a moderator of volatility.
They discourage spending
Expectations about the growth potential of deflationary cryptocurrencies act as a brake on consumption by investors who prefer to wait to obtain a higher return on their investment.
The trend towards low liquidity
Due to the strong incentive to hold, the pressure of demand, and the mechanisms of decreasing supply, the circulating supply is significantly reduced and it becomes difficult to obtain enough tokens available on centralized and decentralized exchanges.
Store of value
Due to their tendency to increase in price due to induced scarcity, they can act as a reserve of value and serve as a hedge in times of economic uncertainty or high inflation, when the exchange value of traditional currencies is seriously affected.
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Differences between deflationary and inflationary cryptocurrencies
We have already made it clear what the deflationary nature of a cryptocurrency consists of, however, to establish the differences between these and inflationary ones it is necessary to define precisely what it means for a cryptocurrency to be inflationary.
Traditionally, inflation is characterized as the general increase in the prices of goods and services during a certain time, or also as the loss of the purchasing power of fiat money in that period, so prices tend to rise.
In the case of the cryptoeconomy, when we talk about inflationary cryptocurrencies we are particularly referring to those whose design involves increasing their supply of tokens over time. That is, an inflationary cryptocurrency has an unlimited supply and demand will never tend to exceed supply.
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Inflationary cryptocurrencies vs deflationary cryptocurrencies
Below let’s see their most notable differences, based on their most notable characteristics:
Unlimited Total Supply vs Limited Total Supply
Inflationary cryptocurrencies have no supply limit and their supply grows unstoppably over time, although they have mechanisms to reduce their growth rate in certain periods.
On the contrary, deflationary cryptocurrencies have a finite supply and their supply progressively decreases until it is exhausted according to a predetermined mechanism.
Supply control mechanisms vs Supply reduction mechanisms
Many inflationary cryptocurrencies have mechanisms to regulate supply in certain periods in order to boost demand to preserve or boost their market value.
In the case of deflationary cryptocurrencies, these mechanisms act to reduce the available supply, both in the short and long term, to avoid volatility, and price manipulation and promote an increase in value.
Increase in spending and liquidity vs Incentive to savings and accumulation
The owners of inflationary cryptocurrencies have low expectations about the sustained increase in their price and, on the contrary, are always alert for the sustained increase in liquidity, which at times saturates the market. Therefore, they are prone to exchange or use for the acquisition of goods and services.
On the contrary, owners of deflationary cryptocurrencies have high expectations about the increase in market value and this incentivizes them to hold their tokens for long periods and even increase their positions over time.
Adoption and growing use cases vs Adoption as a store of value
The high liquidity available and its low cost facilitate the adoption and increase in the use cases of inflationary cryptocurrencies that increasingly increase their presence in the economy, both in daily consumption and in the operation of public and private services.
In the case of deflationary cryptocurrencies, which generally have a high cost, they are more appropriate to be considered a reserve value and as such do not present many use cases that drive their mass adoption and rather tend to accumulate in a few hands, although in some cases such as Bitcoin, the possibility of its fractional purchase may be changing that trend.
Flexible management of the protocol vs Unrestricted respect for the rules of the monetary protocol
The fact of having an unconditional supply in its monetary protocol grants those responsible for its management the freedom to make decisions that allow them to face situations that affect the development of the project or the performance of the cryptoactive in a given situation., in the case of inflationary cryptocurrencies.
For deflationary cryptocurrencies, a modification of the rules established in relation to their deflationary nature could result in a real disaster due to the loss of credibility and trust that this would entail, which would surely be immediately reflected in a collapse in their market price. Therefore, transparency in the management of the monetary protocol and unrestricted respect for what is stipulated therein is of vital importance.
Strengthening security vs concentration and sense of participation and individual ownership
The sustained increase in supply in the case of inflationary cryptocurrencies has as a counterpart that they have strong security support derived from the massive participation of their owners, who contribute with their tokens to strengthen and guarantee the sustainability of the project.
The sustained decrease in supply over time that characterizes deflationary cryptocurrencies results in the concentration of positions in a few holders in the medium and long term and low participation of its user community, since the incentives to do so are not attractive.
However, in the case of Bitcoin, the modernization of its blockchain is aimed at facilitating greater participation by its users and this could change this situation in the medium term.
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Deflationary mechanisms applied in cryptocurrencies
Each blockchain has its particular mechanisms to give impetus to its deflationary strategy in relation to its native tokens. There are actually sort of standards that are followed, so there isn’t a lot of variety in this regard.
It is important to highlight that although these are mostly linked to deflationary cryptocurrencies, they are also applied, some more than others, to inflationary cryptocurrencies to reduce the rate of increase of tokens and limit the circulating supply.
Among the most common deflationary mechanisms are:
- Cryptocurrency halving
- Token burning
- Artificial scarcity
Cryptocurrency halving
Halving is an automatic process programmed into the operating protocol of a cryptocurrency intended to halve the block rewards received by contributors who ensure the operation of the network.
Because the rewards are paid in tokens of the same cryptocurrency, by halving them the number of tokens received is reduced in the same proportion, so the supply is drastically reduced at the time of the halving.
But at the same time that the supply is abruptly reduced on the scheduled date, the supply of tokens to the market becomes slower, as the production of each block becomes more complex due to the necessary adjustments that this entails.
Among these, it is worth highlighting the strong competition that occurs between the participants in the generation of the blocks, which forces higher costs in technology and associated inputs to maintain profitability, with the inevitable consequence of the withdrawal of those who cannot compete.
The introduction of halving in the operating protocol of a cryptocurrency seeks to guarantee:
- The control of inflation, the rate of which is reduced as a result of the lower production of tokens and the maintenance or, as is foreseeable, its increase derived from the greater expectations created around the growth of the asset, which directly affects its present price and future.
- Supply control, which promotes scarcity by reducing the availability of tokens, also affects their value.
Token burning
Token burning refers to the process of removing or “destroying” a certain amount of tokens available on the market at will. It is one of the most used mechanisms due to its great effectiveness in reducing the supply of circulating tokens.
This seeks, first of all, to induce scarcity to strengthen the price of the token in the short and long term, but it is also usually used as a mechanism to control inflation, generating confidence in the development of the project among investors.
This process is applied in different modalities, such as:
- Buyback burning. It is one of the most used methods to eliminate tokens from circulation and occurs when the developers of a cryptocurrency motivate holders to sell a part of their positions with the commitment to burn them, sending them to an address where they will be unusable.
- Burning transaction. It owes its name to the fact that the burning of tokens is predetermined in the smart contract that regulates transactions and normally results in the burning of a part of the fees applied by the network, which benefits long-term holders and permanently revalues the token. token.
- Burning test. Known as Proof-of-Burn (PoB), also called Proof-of-Burning, it is a consensus protocol used by some networks, from which miners must burn a certain amount of tokens to be able to validate new blocks, which guarantees legitimacy. of transactions and prevents malicious behavior.
- Burning migration tokens. It is another of the most used methods in the ecosystem and consists of burning tokens that have been replaced by a new version or that have migrated from other networks where they operated under another protocol. This process promotes the fair distribution of new tokens, based on old positions.
Artificial scarcity
Another of the deflationary mechanisms used by developers is artificial scarcity, which, as its name indicates, consists of generating a feeling of scarcity that acts as a factor that stimulates demand and drives the price to a new level.
Other common strategies to create artificial scarcity include:
- It is one of the strategies that has become very popular due to the great incentive represented by the juicy rewards that some networks provide to boost demand for their tokens and withdraw liquidity from the market by keeping a large share of circulating tokens locked for a certain time. , causing a shortage in the market.
- Scalability is a factor that is used as a limiter of supply by maintaining operating conditions that generate a low volume of transactions, such as excessive processing times, small block sizes, or high costs.
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Why invest in deflationary cryptocurrencies?
The main reason why investors decide to risk their money by placing it in deflationary cryptocurrencies is, without a doubt, their growth potential due to their limited and decreasing supply over time, which drives demand.
Their focus on scarcity and value appreciation make them the most desirable crypto assets for investors looking to add cryptocurrencies to their portfolio that tend to be valued due to the growing pressure of demand in search of increasingly scarce tokens.
This is why cryptographic projects with deflationary tokenomics or mechanisms that make them deflationary are increasingly proliferating in the cryptographic space and are the ones that stand out the most in terms of capitalization.
Inflation protection
Another reason why many crypto market investors prefer to invest in deflationary cryptocurrencies is the protection they provide against inflation by acting as a safe haven asset to store value.
Despite the high volatility of cryptocurrencies, deflationary cryptocurrencies tend to behave much less unpredictably than their inflationary peers, responding in a moderate manner to market fluctuations and pressures.
This particularity makes them a strong ally against inflation because if their demand falls, their price will not show a strong variation because their supply is limited and does not obey market circumstances. which generates confidence and security in its holders.
In fact, the main deflationary cryptocurrencies are compared to traditional assets such as precious metals or raw materials in their behavior in times of strong inflation. While the rest of the assets depreciate, they act as a store of value.
Potential growth
We said at the beginning of this section that their growth potential is the main reason why investors prefer deflationary cryptocurrencies, and we are going to delve into it because of its importance.
While it is true that the growth potential of any asset is given by the set of factors that come together in its exposure to the market, from its design to its adoption, it is no less true that the circulating supply and future supply strongly condition it.
In the case of deflationary cryptocurrencies, their growth leaves no doubt about the enormous potential they contain and how this is decisively influenced by the limitations of their supply and the deflationary mechanisms that support them.
Starting with Bitcoin, Ethereum, BNB, Ripley, Polkadot, and Solana, the most famous memecoins and the latest generation altcoins, all implement mechanisms to reduce their supply and reduce their inflation rate as much as possible, trying to boost in every possible way demand, based on its deflationary nature.
Store of value
There is much debate about whether cryptocurrencies can behave as reserve assets that are capable of preserving their value even in cases of complex economic situations in which the rest of the assets depreciate or do not guarantee the security of the investment.
The discussion about whether Bitcoin will replace gold as the most emblematic reserve of value asset has become every day and the truth is that the use of cryptocurrencies in the daily economy is becoming increasingly popular and in many cases beginning to replace fiat money in many areas.
Regardless of whether one or another cryptographic asset will be the stars of the new economy, everything indicates that deflationary cryptocurrencies are at the forefront of those that can and have the conditions to become in the medium term the most important assets to preserve the investment value.
And this is because they already are to a large extent today, as is the case of Bitcoin and other deflationary cryptocurrencies that are not affected by inflation, do not respond to the restrictive measures of governments, and are growing in investor preference. who are, after all, the ones who define which assets best preserve their value.
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Deflationary Cryptocurrencies in Trend – Review
As we have already pointed out, deflationary cryptocurrencies have become investors’ favorites and that is why many of them are trending, presenting high demand in the market. Among these, the most notable are:
PlayDoge – The game in which Doge is the mascot
The new Doge now comes in the form of a virtual pet that must be protected daily by its owner. PlayDoge is the typical meme cryptocurrency that incorporates profits and is deflationary due to having a limited supply of 9.4 billion tokens.
PayDoge is in pre-sale with 50% of its tokens available in 40 stages, which means that its supply when it goes on the market will be very limited and will function as a mechanism to boost the price due to the high pressure of its demand, which It undoubtedly makes your investment very attractive at this time.
WienerAI – The intelligent dachshund
WienerAI is another of the trending deflationary cryptocurrencies that are currently in a very successful pre-sale. Its tokenomics shows that it has a limited supply of 69 billion tokens, of which 30% will be distributed at this stage.
Staking already acts as a deflationary mechanism, currently blocking more than 4.3 billion tokens. Likewise, only 10% is reserved for liquidity once it has been launched on the market, which means that the demand pressure will be very high, which is why its low pre-sale price looks like a bargain for investors.
Sealana – Solana’s lazy seal
Another of the memecoins from the leading network in the development and launch of memecoins that are bursting the market, as is already beginning to emerge with this new memecoin that without many signs is managing to attract the favoritism of buyers who love meme coins.
Taking into account the characteristics of the Solana meme cryptocurrencies, we assume that it, which does not have a limited supply, will have a mechanism for reducing circulating supply, such as burning, exchanging, or repurchasing of tokens that incorporate a deflationary character that allows it to tend towards medium and long-term growth.
Base Dawgz – The new memecoin of the Base network
The latest memecoin from the new and successful Base chain is in pre-sale and with very positive news for investors in deflationary cryptocurrencies. has a limited supply of 8.453 million tokens, of which 20% will be distributed at this stage.
Once launched on the market in CEX and DEX, only 10% will be available to buyers, with the detail that its smart contract cannot be modified and its developers renounced their ownership, so the community will assume the direction of the project to ensure that its deflationary character is maintained over time.
Mega Dice Token – The casino within reach of a token
With 420 million total issuance MegaDice Token is presented as a cryptocurrency with a strong deflationary identity that is causing a real sensation among investors who love casino games.
Periodic burning and repurchase of tokens by the platform are the supply reduction mechanisms contemplated by this project to guarantee that the price remains stable or increases according to the behavior of demand, which everything indicates will be of strong significance after the presale.
99 Bitcoin – The token to learn by earning
99Bitcoin, the token of the most famous platform for disseminating knowledge about cryptocurrencies, is in a very successful pre-sale due to the great attraction it exerts on investors due to its totally deflationary design.
Supply limited to 99 billion tokens, 17% destined for community buybacks, 8% for liquidity, and 14% for staking rewards, leave no doubt that its supply will be reduced and will drive the increase in its market value, so Your early investment can prove very lucrative.
Sponge V2 – The new and improved Sponge
With a very marked deflationary character, Sponge V2 is a completely improved version with respect to its predecessor, which was clearly inflationary and could not stop its loss of value as it lacked the necessary mechanisms to do so.
Supply limited to 150,000 million tokens, 26% for the bridge that converts Sponge V1 into Sponge V2, 43% rewards for staking, and 10% for CEX, make it a totally deflationary token that has a high probability of increasing its price in the short term due to the great pressure that its demand may experience. This makes it highly attractive for investment.
eTukTuk – The token that changes mobility
With a marked deflationary inclination that is expressed in its issuance limited to 1 billion tokens, eTukTuk is one of the cryptocurrencies that is trending due to the great attractiveness it presents to investors.
Its unconventional supply reduction mechanisms give it a lot of strength, as it seeks to benefit its community of users and enhance the project by allocating a large number of tokens to promote participation and boost the development of the project.
Conclusion
We have presented and reviewed the best trending deflationary cryptocurrencies and the different supply reduction mechanisms they incorporate in their interesting projects.
Likewise, a detailed review has been made of what cryptocurrencies are that are classified as such and their most notable characteristics and their differences with the so-called inflationary cryptocurrencies have been analyzed in depth.
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You can also visit https://bestcryptotobuynow.io/ for more investment opportunities.
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