DOGE has no hard cap. Why is the inflation rate declining?
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“ The number of coins is growing” and “the inflation rate is declining” can both be true at the same time.
In the $DOGE model, annual issuance is about 5 billion new coins. That’s a roughly fixed amount, not a fixed share of the existing supply.
Simple hypothetical arithmetic: with a supply of 100 billion, an increase of 5 billion is 5%. With a supply of 200 billion, the same increase is 2.5%. New coins keep appearing, but the base used to calculate the percentage gets larger.
This leads to two common mistakes. The first is treating a declining percentage as proof that the number of coins is shrinking. The second is automatically inferring future price growth from this model.
Demand still matters for the price: are participants willing to buy the available supply, and at what valuation? How issuance works helps explain the asset, but it doesn’t replace analysis of its use and the market.
Which figure do you usually compare: the number of new coins or their share of the total supply?
...
“ The number of coins is growing” and “the inflation rate is declining” can both be true at the same time.
In the $DOGE model, annual issuance is about 5 billion new coins. That’s a roughly fixed amount, not a fixed share of the existing supply.
Simple hypothetical arithmetic: with a supply of 100 billion, an increase of 5 billion is 5%. With a supply of 200 billion, the same increase is 2.5%. New coins keep appearing, but the base used to calculate the percentage gets larger.
This leads to two common mistakes. The first is treating a declining percentage as proof that the number of coins is shrinking. The second is automatically inferring future price growth from this model.
Demand still matters for the price: are participants willing to buy the available supply, and at what valuation? How issuance works helps explain the asset, but it doesn’t replace analysis of its use and the market.
Which figure do you usually compare: the number of new coins or their share of the total supply?