Inflationary Token
A token whose total supply grows over time through ongoing issuance, generally used to fund network incentives like staking or mining rewards.
An inflationary token is one whose total supply grows over time through ongoing issuance, generally used to fund network incentives — most commonly staking or mining rewards (see Kaavon's "Emissions Schedule" glossary definition) — the structural opposite of a deflationary token (see Kaavon's "Deflationary Token" glossary definition).
An inflationary issuance schedule dilutes existing holders' percentage ownership over time unless they specifically participate in whatever mechanism (such as staking) distributes the new issuance back to them, a genuinely important distinction between a token's inflation rate and any individual holder's own dilution-adjusted outcome.
Examples
- A Proof-of-Stake network's ongoing issuance to validators is a common example of deliberate, functional token inflation, funding the network's security incentives.
- A holder who doesn't participate in an inflationary token's reward-distribution mechanism (such as staking) experiences real dilution of their percentage ownership over time.