What Makes Deflationary Tokens a Preferred Choice in the Crypto Market: A Case Study of CET’s Repurchase & Burning Mechanism

News BTC

In the crypto market, though most cryptocurrencies share similar underlying technologies, they are designed based on different economic models known as tokenomics. To be more specific, some cryptos feature a supply that increases over time, while some others have a fixed supply. Yet, a minority of cryptos come with a diminishing total supply that looks deflationary. Such tokens are referred to as deflationary cryptos.

We all know that some cryptos with a fixed supply, such as Bitcoin, are generally deflationary by default. Most members of the Bitcoin community reject inflation because it often represents a loss of value. For instance, a real-world currency issued by the government often controls the entire financial system of the country. If a government frequently issues a large supply of currency via the central bank while setting low interest rates and buying a huge amount of foreign bonds, the country will be prone to a credit crisis and even worse an economic depression.

How To Get Free Crypto  

Before publishing the BTC whitepaper, Satoshi Nakamoto had noticed that real-world currencies issued by the government are subject to inflation, which inspired him to develop an alternative store of value that’s similar to precious metals but is achieved digitally. Bitcoin’s flexible mining difficulty and mining reward mechanisms help it suppress inflation. Meanwhile, the unique design of Bitcoin continues to drive up its value. It should be noted that Bitcoin is deflationary not only because of its fixed supply but also because the block reward is halved about every four years.

5 BTC + 300 Free Spins for new players & 15 BTC + 35.000 Free Spins every month, only at mBitcasino. Play Now!

Deflationary cryptos like Bitcoin represent not only innovative blockchain architectures and cutting-edge consensus mechanisms but also a broader experiment of moving the deflationary long-term stores of value from the real world to the crypto space.

Normally, the perk of having a deflationary cryptocurrency lies in the fact that as the total supply and the circulating supply decrease, the crypto will become more valuable, and more crypto users will pay attention to the crypto and invest in it.

BitStarz Player Lands $2,459,124 Record Win! Could you be next big winner?

Get 110 USDT Futures Bonus for FREE!

We could make a token deflationary by burning a certain percentage of the supply, repurchasing and burning some of the tokens, or repurchasing and holding the tokens. The most common method is to burn tokens manually. For instance, CET, the platform-based token of the global crypto exchange CoinEx, is a token that becomes deflationary via repurchasing and burning.

Coinbase Banner  

According to the value agreement of CET, CoinEx will repurchase CET every day with 50% of its trading fee income and burn all CET repurchased at the end of each calendar month until the total supply of CET reduces to 3 billion. In the next stage, the exchange will continue to spend 20% of its trading fee income upon CET repurchase and burning until the remaining CET is completely burned.

The total supply of CET is 10 billion, and through continuous efforts, CoinEx has repurchased and burned about 6.3 billion CET, and the current total supply stands at approximately 3.5 billion, according to the data on its official website as of May 19, 2022. As more tokens are repurchased and burned, the CET price had been growing throughout 2021, which attracted the attention of many crypto users. As CoinEx continues to repurchase and burn CET, the circulating supply of this deflationary token will keep dropping, and the value of CET as an ecosystem-based token will also rise over time.

Generally speaking, crypto users prefer deflationary tokens. In the long run, the value of deflationary tokens will increase as their circulating supply continues to drop, or in other words, the net worth of deflationary tokens held by their owners will be on the rise.

Go to Source
Author: NewsBTC


Recommended Crypto Services, Products and Strategies:

The first thing any crypto investor needs is is a reliable and secure Crypto Wallet.  Whether you’re looking for an online wallet, hardware wallet, desktop or mobile wallet, Crypto Renegade provides you with all the Best Crypto Wallets in each category.

FreeBitcoin Banner  

Best Crypto Wallets Banner

When you’re ready to buy more crypto, or exchange your coins for others, Crypto Renegade’s list of the Best Crypto Exchanges has you covered.  The Crypto Exchanges recommended here offer everything from simplicity and convenience to advanced trading platforms and profit sharing. 

Best Crypto Exchanges Banner

If you want to learn more about the methods and tools that can be used to find Great Crypto Projects, then be sure to check out Crypto Renegade’s strategy for How To Find The Best Cryptocurrency.

Crypto Strategy Banner

For those people that don’t have any money to invest right now, or just want to understand the technology a bit more, you’ll definitely want to check out Crypto Renegade’s Free Crypto Strategy and start collecting Free Coins today!

Free Crypto Banner

What do you think about cryptocurrency? Do you have any questions about it? Be sure to leave a comment below.

This site uses Akismet to reduce spam. Learn how your comment data is processed.