Currently, there are over twelve thousand coins in the market, and the number is still growing. The crypto market cap has crossed $2 trillion and is expected to move upwards in the near future. The economic models of these tokens are playing a huge role in their success, and the rapidly growing economic model in deflation tokens, the new coin, is taking this market by storm.
Deflation tokens are affecting crypto projects to reach new levels, and in this article, we are providing detail about deflationary tokens.
# The concept behind Deflationary Tokens
While deflation is considered a bad thing in traditional finance, it is a positive element in the cryptocurrency world. In traditional finance, deflation refers to a decrease in the price of an asset due to certain conditions, such as more mining.
Deflationary crypto decreases its market supply over time. This factor implies that the user or team of the project will participate in activities that reduce the supply of coins on the blockchain. Most of the time it is done by burning the tokens.
However, cryptocurrencies with limited supply are already deflationary by default. Since the supply is limited whenever investors buy coins, its supply decreases.
# How do deflationary tokens work?
As already mentioned, deflation in the crypto-verse means the burning of tokens from circulation. The confusion comes in how the tokens get burned.
There are two types of burning mechanisms: buyback and burn, and transaction burning. The buyback is a self-explanatory mechanism as it involves the platform buying back tokens from holders or markets and locking them at an inaccessible address; A platform can use its share of profits to execute this process.
Meanwhile, transaction burning is a mechanism where a platform employs a smart contract that automatically burns part of the transaction fee.
# Benefits of Deflationary Tokens
Deflation tokens can bring many benefits to both investors and projects. Beyond everything else, deflationary tokens seek to solve the issues with traditional finance. Contrary to popular results, deflation tokens have a positive impact on the crypto space.
Here are some ways that projects can benefit from them:
> Increase Coin’s Value
> More Profits
> No need for mediators
> Removing Extras from the Market
> Meet the Hyper-Deflationary Token
KUKU is a hyper-deflationary reward token. KUKU is the first Suriname Token operating on Binance Smart Chain (BSC) based on the BEP20 protocol. It is part of the Pankuku project which may seem inspired by pancake swaps, but it has a better plan for the future, and will soon become the largest decentralized exchange (DEX) in the market with its broader product offering.
The project has many products, features, and unmatched opportunities for holders, traders, and investors. panKUKU will make trading fun and rewarding. If you want to know more about the project, its products, and opportunities make sure to check the official website, and go through the whitepaper. If you like the concept and want to be a part of it, don’t forget to invest in it and show some support.