Smartlands Network Architecture Explained: Inflation Update
Inflation is a very centric concept in any economy though inflation in the real economy and digital economy fundamentally differ. It does have different meanings. Inflation in the real economy is a change in the price level of goods and services, while in the digital economy is closer to the etymology of the word and means rate of increase in the total supply of a coin/token. Moreover, in real economy inflation is a result of many factors like change in money supply (namely inflation in digital economy meaning), GDP growth rate, key rate, advance in technology/productivity, etc, which in turn are driven by many other factors, inflation in the digital economy is usually set as a mechanically determined input. Nevertheless, inflation in both economies influence a great number of parameters, therefore we put a lot of consideration to this issue.
Inflation of a token that results in a steady increase in the number of tokens of all token holders without any actions required by a token holder is meaningless and could be compared with permanent company stock split. It does not increase the total value of tokens as well as stock split does not increase a company’s value. Provision of inflation tokens to certain actors disregarding the amount of tokens they hold is likely to be unfair and will dilute stakes of token holders and most likely diminish their value.
