#baby $BABY @BabylonLabs_io
Yesterday's post sent me back to BABY's tokenomics page, this time focusing only on the supply mechanics.
One thing became much clearer.
The protocol mints 8% new BABY every year. That's fixed. It's how staking rewards are funded, and it happens regardless of network usage.
The burn side is very different. BABY is only burned through BSN reward auctions, where participants bid BABY to win BSN rewards, and the winning bid is burned.
At first, I mentally paired those together and assumed the design was meant to roughly cancel itself out.
That's not what the documentation actually says.
It explicitly states that the net supply depends on network activity and governance parameters.
In other words, inflation is guaranteed. Burning is conditional.
No BSN rewards to auction? Less burning. Limited BSN adoption? Less burning. Weak bidding activity? Less burning.
So the real question isn't whether BABY has a burn mechanism. It does.
The question is whether today's level of BSN activity is producing enough burn to meaningfully offset the fixed 8% annual issuance.
The docs don't provide that answer—they simply point back to network activity.
With BSN adoption still in its early stages and only a limited number of chains onboarded, I'm curious what the actual net inflation rate looks like today, and how far it is from the longer-term deflationary vision the auction mechanism is designed to support.
Yesterday's post sent me back to BABY's tokenomics page, this time focusing only on the supply mechanics.
One thing became much clearer.
The protocol mints 8% new BABY every year. That's fixed. It's how staking rewards are funded, and it happens regardless of network usage.
The burn side is very different. BABY is only burned through BSN reward auctions, where participants bid BABY to win BSN rewards, and the winning bid is burned.
At first, I mentally paired those together and assumed the design was meant to roughly cancel itself out.
That's not what the documentation actually says.
It explicitly states that the net supply depends on network activity and governance parameters.
In other words, inflation is guaranteed. Burning is conditional.
No BSN rewards to auction? Less burning. Limited BSN adoption? Less burning. Weak bidding activity? Less burning.
So the real question isn't whether BABY has a burn mechanism. It does.
The question is whether today's level of BSN activity is producing enough burn to meaningfully offset the fixed 8% annual issuance.
The docs don't provide that answer—they simply point back to network activity.
With BSN adoption still in its early stages and only a limited number of chains onboarded, I'm curious what the actual net inflation rate looks like today, and how far it is from the longer-term deflationary vision the auction mechanism is designed to support.