📈Issuance & Inflation

In a Proof of Stake (PoS) blockchain, inflation is used as a tool to incentivize participation in the network. Inflation creates and distributes new tokens to participants who can use their tokens to either interact with the protocol or stake their assets to earn rewards and vote for governance proposals.

Especially in an early stage of a network, where staking rewards are high and there are fewer possibilities to interact with the network, inflation can be used as the major tool to incentivize staking and thereby securing the network.

With more stakers, the network becomes increasingly stable and decentralized. It becomes stable, because assets are locked up instead of causing price changes through trading. And it becomes decentralized, because the power to vote for governance proposals is distributed amongst more people.