Inflation

Inflation in crypto and inflation in the real economy work very differently. Fiat inflation happens when central banks expand the money supply or when goods become scarce relative to demand. Crypto inflation is the direct result of a protocol mint function writing new tokens to the ledger every block and handing them to people who did work: validators, stakers, miners, or GPU suppliers. The rate is set by the protocol, it’s transparent, and it’s usually capped by a halving schedule.

A typical DeAI network might emit 5-15% of total supply as new tokens per year in its early years. That’s high compared to traditional finance but low compared to meme coins or some airdrop farming schemes. The dilution effect is real for any holder who doesn’t participate. If you hold NEAR without staking, a 2.5% annual inflation rate means you own 2.5% less of the network every year, offset by whatever price appreciation the network generates (which may or may not cover it).

The more interesting question is whether inflation is declining or static. Networks that cut emissions over time — NEAR’s 5% to 2.5% halving, Ethereum’s post-merge transition to near-zero issuance, Bittensor’s Bitcoin-style halving schedule — are structurally different from networks with flat permanent inflation. Declining emissions signal that the network expects fee revenue to eventually take over from subsidies. Flat emissions signal that the network is either early or permanently dependent on dilution to function.

The honest way to read any inflation number is to ask three questions. How is it funded (emissions, fees, treasury)? What does it pay for (security, participation, marketing)? And what’s the path to reducing it (halvings, governance votes, fee switches)? OYM’s Supply Dynamics dimension of the Returns Score captures this, but the inflation rate on its own is not informative until you know the direction of travel and the offset mechanisms (burns, fee-driven buybacks) that reduce the effective dilution.