Crypto Inflationary Models – The New Bread & Butter

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21 Jul 2024

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Turning The Tables
For the longest time, only a select group of individuals enjoyed the benefits of inflation. That’s right, while much of society is burdened by inflation, some benefit. The Cantillon Effect is a dynamic worth studying regarding this topic. Inflation refers to the increase of the monetary supply, which ultimately dilutes the value of the existing currency in circulation. Things don’t become more expensive, money becomes less valuable, and more is required.
Many Crypto enthusiasts are unaware that the majority of Cryptocurrencies are in fact, inflationary-based models. Even Bitcoin is an inflationary-based protocol. Yes, inflation is gradually reduced over time, but it is still present. What do you think mining rewards are? It’s inflation, plain and simple. Miners are simply earning Bitcoin’s inflation, issued approximately every 10 minutes. The halving slashes the inflationary-based mining rewards by 50% every 4 years.
Proof-of-Stake protocols are the same in principle. Newly minted tokens are paid out to those securing the network through staking their tokens on-chain. Once again, these are inflationary-based rewards. Now the average Joe can gain access to newly minted tokens and can enjoy the benefits of an inflationary-based network. This is an avenue of Crypto being utilized and leveraged as a passive income source for many Crypto investors. It’s a simple and relatively low-risk idea.
Building Passive Income Machines
Miners have to buy mining rigs, whereas stakers have to acquire tokens. Either way, capital is required. However, with Proof-of-Stake comes a few additional perks. For example, the Hive blockchain enables users to earn tokens without purchasing them. These tokens can then be delegated to the blockchain’s delegated Proof-of-Stake protocol. In other words, users can begin building a passive income source free of charge. This is the beauty of the Crypto space. It operates on entirely new ideas and principles.
Those who are active and committed on-chain get to take home a larger piece of the inflationary-based pie. It’s that simple. There are many different and even unique Proof-of-Stake models. However, the protocols that operate on a do-to-earn basis all share the same idea… the more you do, the more you make. There are also Proof-of-Stake protocols that are entirely passive and require the purchase of tokens. Once delegated, these tokens begin earning yield which is newly printed tokens from the protocol.
Yes, these rewards are 100% inflationary-based and are usually paid out multiple times daily. With many creative ways of acquiring freshly minted tokens, inflationary rewards are becoming the new cash cow. The more exposure you gain to inflationary-based rewards, the more you love and appreciate its enormous potential. Once investors or contributors begin compounding rewards, passive income takes on a life of its own.
This is often evident in the lives and accounts of dedicated WEB3 contributors, who continue to contribute and participate, regardless of token prices or market conditions. These do-to-earn inflationary-based models hold significant value, but only if utilized correctly. It’s often a slow start. However, rewards tend to increase, ultimately providing another new income stream. These protocols reward those who build and compound. It’s a process of daily disciplines and ongoing accumulation and compounding.

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Final Thoughts
Provided you are HODLing the right tokens, inflation is your friend. Not only that but inflationary-based models can in time become your bread and butter. Alternatively, this income can free you up to focus on other ventures apart from a 9 to 5 hustle. Or they can also become a means to additional income for other investments, holidays, and whatever else you want to achieve. Enjoy what’s left of the weekend and I will catch you in the next one!

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Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.