Cardano’s ADA is disinflationary. The current reward distribution, down from roughly 11.5 million ADA a year ago, is about 10 million ADA every epoch, according to crypto analyst ADA whale.
The unnamed expert claimed that buying and staking ADA at the current price is equivalent to mining Bitcoin in 2013–2015, and that opportunity won’t last forever.
A puzzled user inquired as to whether staking now is preferable before it’s too late or if rewards will decline over time as supply declines.
The analyst replied although he won’t speculate on Cardano’s value but feels this is the best time to buy. Here’s why.
Per the expert, the token is on a deflationary path, meaning there will be less ADA available in the future; second, the price of the coin is more than 90% lower than its most recent peak; and third, the staking yield is currently close to its highest levels, but it won’t always be so high.
That being said, supply limits play a key role in whether crypto is inflationary or deflationary.
A supply limit indicates the maximum amount of any given coin or token that can ever be put into circulation. A deflationary cryptocurrency has a decreasing circulating supply which is comparatively rarer in the market than inflationary cryptos.
When no more coins can be mined, it’s bad news for the mining industry. However, if the supply of a coin can no longer meet the demand, it will likely see a price increase.
While some investors choose deflationary cryptocurrencies over inflationary ones or vice versa, the reality is that each type of cryptocurrency has advantages and disadvantages.
While inflationary cryptocurrencies may lead to a situation where demand exceeds supply, they enable the mining industry to go on forever.
Deflationary cryptos, however, provide the benefits of a price spike, which is also a huge advantage for investors. When their boundaries are inevitably surpassed, only time will tell if such cryptos will indeed experience such a rise.
Cardano Deflationary’s Advantage On Stablecoins
A few weeks earlier, Cardano and IOG founder Charles Hoskinson recommended using ADA to create healthy collateral backing, as it is deflationary like that of Bitcoin.
Hoskinson was referring to the idea of an algorithmic stablecoin as a way to break up nation-state authority over the creation and use of fiat money. Further, the Cardano founder believes that the adoption of this idea is inevitable because it serves as a “gold standard” in the digital era.