finbold.com
IOTA (MIOTA) was among the worst-performing cryptocurrencies during the weekend, with a drop superior to 12% in 40 hours after an announcement by the IOTA Foundation (IF) that the token’s fixed supply would be changed, for a 4-year inflation of 39.58%.
This recent announcement was faced with surprise by the community, and even among old-time supporters and contributors to the ecosystem, who always believed IOTA’s tokenomics were based on a non-inflationary and fixed supply of 2.78 billion MIOTA.
“Out of all the major tokens, #IOTA is the only token economy without any inflation.
There will never be more tokens. There is only a limited number of tokens.”
— Dominik Schiener (@DomSchiener), Executive Director and Co-Founder of the IF, in 2021
How much IOTA’s supply will be increased?
As per the announcement, IOTA will have a yearly inflation of around 10% for the next four years, if the foundation sticks to current plans. The supply will be increased by 1.82 billion IOTA, to a total of 4.6 billion tokens.
This is how the new IOTA supply will be distributed:
-
31.08% to IF, TEA and UAE (1.43 billion IOTA tokens):
- 7.075% to the IOTA Foundation;
- 12% to the Tangle Ecosystem Association;
- 12% to the UAE Foundation.
- 5.00% to contributors (230 million IOTA tokens);
- 3.50% as an airdrop to ‘Assembly Stakers’ (161 million tokens).
In this context, it is impossible to know how low (or high) IOTA can go in the following days, weeks, months, and years. Further development, the team’s credibility, news, adoption, micro, and macroeconomics will play important roles in defining the future of this feeless, DAG crypto network.
Interestingly, from a purely mathematical point of view, it would be expected to see a drop of close to 40% from IOTA’s price, in four years, proportional to the supply increase. In case the demand for the tokens remains the same.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.