The crypto space is rapidly expanding and in-comes different token models with different features leveraging varied mechanisms. Tokens in the crypto space are broadly categorized into either inflationary token or deflationary tokens. An inflationary token employs a unique model where tokens are added to the market after a specified period of time.
A well-demonstrated example of inflationary token is Bitcoin, which is released at a rate of 12.5 new coins every 10 minutes as a form of reward to the miners for mining the next block. Not all inflationary tokens are issued via mining. For instance, Ripple (XRP) is issued by the company, which gradually sells them off to fund operations.
Deflationary tokens take a novel approach where tokens are eliminated from the market “Burned” after a given period of time. There are several mechanisms in which are removed from the market, such as buying-back and token burns from the issuer. The major benefit of deflationary tokens is that the coins grow in value as the coins get burned and also can be staked in a pool to raise their own capital and ensure liquidity.
There are concerns that the elimination of excess tokens makes deflationary tokens less available and consequently decreases the actual supply of the token. However, this is not the case with deflationary token since as they can actually be divided by 100 millionths, thus can never be short of supply.
Nonetheless, deflationary tokens have since come under fire from regulators such as U.S Securities and Exchange Commission (SEC) as they are often viewed as security. The main issue is that the deflationary mechanism used to purchase tokens from the market is generally dependent on a company’s success. If a company is quite successful, it will be able to buy more tokens from the market, reducing the supply and making the token much successful.
On the other hand, if the company performs poorly, it will fail to buy the excess supply of the token leading to a non-functional ecosystem. In essence, deflationary tokens are often viewed as security due to the heavy link between the company’s success and the circulation of the ecosystem. Currently, there are over 20 deflationary tokens in the crypto space with burn rate ranging from as low as 0.1% to as high as 90%. This guide will look at the top four deflationary tokens looking at their mechanism and technology behind them.
PYRO is an ERC20 deflationary and staking token that will be utilized on the PYRO.NETWORK, which constitutes a series of projects including but not limited to a social network, digital advertising network, and blockchain gaming dApp platform.
The PYRO token is more than any other deflationary token, users of the PYRO Social Networking Platform will be rewarded in PYRO for their daily activity. The token has a burn rate of 5% on each transfer and also comes with staking capabilities. Users that stake or “freeze” their PYRO are also offered an amount of PYRO, which is proportional to the amount of the frozen tokens. Also, for the 5% of PYRO burned token, 2.5% is distributed among HODLers. At the time of writing, PYRO was trading at $$0.00008032 with a 24-hour trading volume of $1, 306.65. It currently has a circulating supply of 0 coins and a max supply of 1 Billion coins.
As of 3rd March 2020, PYRO is on both Ethereum and TRON with a new TRC20 deflationary token. The first phase of PYRO on TRON will be airdropped to current PYRO ETH holders but users will need a TRON wallet i.e. TronWalletMe. This development was announced on Twitter via the official PYRO Network Twitter handle.
The Burn Token is another notable deflationary token in the crypto space offering deflationary capabilities at a rate of 1% of the transacted amount. The token is backed by Ethereum stored in reserves and offers full liquidity in accordance with the exchange contract. Therefore, BURN holders can sell their tokens in exchange for ETH or any other token they want.
1% of every BURN transaction( trade or transfer) is transferred to the Ethereum Genesis Wallet. The transfer eliminates the amount transacted from the total supply of BURN. This means that BURN’s supply falls with every transaction, thus resulting in a continuous rise in BURN’s price. BURN doesn’t have an airdrop. Instead, each BURN is traded for Ethereum, and the community is responsible for driving the price.
Regarding its technology, BURN employs Uniswap– an Ethereum-based protocol that is designed to facilitate automatic digital asset exchange between ETH and ERC20 tokens. The exchange contract holds a reserve of ETH and BURN tokens. The exchange contract also allows for direct ERC20 to BURN trades using ETH as an intermediary. Uniswap also functions to mint liquidity token to track how much each liquidity provider as contributed in relation to the total reserves. BURN Token was introduced in the market on 24/06/2019 and traded at $0.0011494. 0.3% of all trade volume is distributed proportionally to all liquidity providers in the liquidity pool.
The BOMB Token
The BOMB Token is also an Ethereum-based deflationary token. Like BURN token, 1% of the tokens used in the transaction are destroyed. Currently, there are just 1 million BOMB tokens in existence, and the number is decreasing at a fast rate. There are only 1 million BOMB tokens left in existence, and its projected that by 2034 no BOMB tokens will have been left in existence.
BOMB Token prides itself as a “self-destructive currency” and as a “social experiment” created to establish the feasibility of a deflationary currency. BOMB has been rated as the best most successful airdrop in the crypto space running a website such as Coinmarketcap, Mercatox, and DDEX with a trading volume of $ 1 million a day. BOMB seeks to be the leading deflationary token in the crypto space in the future.
The SMASH token is a deflationary token with an algorithm built to accomplish a 2% irreversible token burn in all transactions carried out. This burn achieves a decrease in token supply with time, in turn, enhancing scarcity and enhancing the token’s value to the advantage of developers and investors. SMASH is also a unique token as it provides support and charity for the poor and needy. SMASH Token also powers a social platform that allows unlimited interaction between caregivers and supporters to help end insolvency in the world.
SMASH token is based on Ethereum Blockchain with an initial supply of 1, 000, 000. SMASH Tokens gives users exclusive access to premium app subscription service. SMASH token also acts as a gateway to various digital assets, thus allowing investors to adjust their portfolio according to their needs.
Deflationary tokens have become quite prominent in the crypto space, and it’s based on the premise of reducing the supply on each transaction to increase scarcity and consequently enhance the price of the token in circulation. Deflationary tokens have largely been compared to stable coins but with better capabilities to combat the problem of volatility and inflation in the crypto space.
There is no doubt that deflationary tokens provide a new frontier in the crypto sector attributed to the burning practice, which stabilizes tokens or crypto market value, in turn, building a sense of confidence in investors to hold on to their tokens for long. Going forward, we are expected to see more deflationary tokens launched in the crypto space accompanied by increased blockchain adoption.