What are inflationary and deflationary Crypto Assets? (2025)

Market Trends and Developments in 2025

The Crypto Assets sector will continue to develop significantly in 2025, especially in terms of Inflation and Deflation mechanisms. The latest data analysis reveals several noteworthy trends:

Inflation hedge reality

Research shows that the correlation between Bitcoin and Inflation is more complex than previously thought. While Bitcoin is often promoted as an inflation hedge, data from 2022-2025 indicates that the correlation patterns vary, especially during periods of high inflation.

The constantly evolving tokenomics metrics

Fuel Fee Economics

The network fee revenue of Ethereum reached a historical low in 2025, significantly affecting its Deflation mechanism. According to a report by IntoTheBlock, this decline is attributed to a decrease in speculative activities and users migrating to Layer 2 solutions.

Central Bank Perspective

Central bankers now recognize the role of controlled Inflation in economic stimulus. The Federal Reserve maintains a target Inflation rate of about 2% for fiat currency, while Crypto Asset protocols are increasingly implementing adaptive supply mechanisms that respond to usage metrics rather than fixed schedules.

As the Crypto Assets market matures in 2025, the distinction between inflationary and deflationary assets continues to blur, with hybrid models offering a complex tokenomics approach that balances stability and value preservation.

What are the Crypto Assets of Inflation and Deflation?

[TL;DR]

You must have heard how the world economy is affected by Inflation or Deflation. But did you know that these two concepts are also essential in crypto economics?
Analyzing the long-term price of Crypto Assets cannot be done without this key determining factor of its market supply. On the other hand, Crypto Assets with a fixed supply may encounter Deflation, while an unlimited number of coins may lead to Inflation.

There is a debate about which is better in the field of Crypto Assets. You have likely heard that Crypto Assets can be used to combat Inflation, just as it favors Deflation – among other positions regarding the impact of Inflation and Deflation on Crypto Assets. Keeping up with everyone may seem complicated, but these two concepts are not difficult to understand. You just need to grasp the specific terminology.

In this article, we will help you understand the basics of Inflation and Deflation, the role that Crypto Assets play in these two concepts, what assets are involved in Inflation and Deflation, and what you need to know about these Crypto Assets to choose the right coin.
Let’s dive in!

What is the difference between Inflation and Deflation?

Inflation can be defined as the rise in the prices of goods and services. With inflation, a currency gradually loses its purchasing power.

Contrary to the myths about Inflation, it is not always a harmful effect. It can also stimulate economic growth.
However, if excessive Inflation is disproportionate to a person’s wages or leaves little room for an effective budget, then it is unhealthy.

On the other hand, Deflation can be defined as a decrease in the prices of goods and services. A decrease in the money supply generally leads to Deflation.

As the value of currency rises, it also becomes more scarce. A fixed or reduced supply alongside stable demand typically leads to Deflation, causing the value of the currency to increase in price.

The quantity and value of money affect two types of currencies in circulation (Inflation and Deflation).

Crypto Assets may become objects of Inflation or Deflation. When the supply of tokens in circulation is unlimited, Crypto Assets are inflationary. Some Crypto Assets may also become deflationary when they have a fixed number of tokens.

In some cases, fiat currency falls under the category of Inflation currency, while most Crypto Assets tend to be a form of Deflation. Regardless, there is no fixed position when it comes to Crypto Assets.

Key indicators for determining the inflation and deflation of Crypto Assets include maximum supply, total supply, and circulating supply.

Inflation’s Crypto Assets

Typically, new tokens are introduced to the network through mining or staking. As the supply of tokens increases, their value is also declining.
Over time, this increase in supply will lead to a situation where more and more of this token is used to purchase a specific item.

Examples of Inflation currency

There are several types of Inflation Crypto Assets in the market. Here are examples of Inflation Crypto Assets that you can check out:

1. In 2014, the rigid cap of 100 billion was removed. DOGE
   , to ensure an unlimited supply of assets. This Inflation initiative was carried out by one of its creators, Jackson Palmer.

2. Stellar’s XLM
   There is a fixed annual interest rate of 1%, which helps ensure that those who can obtain this coin can continuously gain a decent monetary value in line with global market Inflation.

3. To some extent, Bitcoin
   is another type of Inflation asset, with a hard cap of 21 million. At the time of writing this article, there are only 19,057,106 BTC in circulation. Through the mining process, tokens are added to the market supply. Once
   Bitcoin
   , reaching the threshold of 21 million dollars, it will become a deflationary crypto asset.

At the same time, there are also some measures to curb Inflation, which occasionally hinder the Inflation rate. The main one, called “halving”, reduces the amount entering circulation or obtained from mining every four years.
Bitcoin .

Although 19 million bitcoins have been mined, it is estimated that the network will not reach a tipping point before next century, thanks to the slow decline of mining rewards.

The mining reward in 2016 was 12.50 bitcoins. Later, it decreased to 6.25 in 2020 and is said to decrease to 3.125 in 2024.

Deflationary Crypto Assets

Deflationary Crypto Assets refer to those whose supply in circulation is limited. Since the smart contracts of Crypto Assets usually determine their maximum supply, the possibility of exceeding this limit is almost non-existent.
Nevertheless, the supply of some Crypto Assets may be exhausted after a period of time.

If these Crypto Assets do not naturally recover (high demand), their prices will decrease to a low point until they reach their limit. Once they reach their limit, their supply will stop.

Deflationary Crypto Assets can become worthy investment targets because they can withstand the impacts of Inflation.

Deflation Crypto Assets List

Many Crypto Assets work like central banks but still made it onto the Deflation list. They take necessary measures to preserve value and keep it under control. Here is the list of Deflation Crypto Assets:

1. A notable example of a deflationary crypto asset is BNB. Every quarter, BNB is burned to reduce its supply until the total supply of the token reaches 100 million BNB.

2. Before doing anything, you should know that, Bitcoin
   It is both an inflationary Crypto Asset and a deflationary Crypto Asset. It is deflationary because the rewards for miners are halved every four years.

3. Tether USD stablecoin is an example of this Crypto Asset. Its network mines and burns tokens to stabilize its price at 1 dollar.

4. Similarly, Ethereum’s native token - Ether also experienced Inflation. However, an update in August 2021 required that some coins be burned when network activity increased, making it Deflationary.
   Out of $4.5 billion, over 1.7 million valuable Ether coins were burned.

5. Ripple has a unique way to maintain its Deflationary token (XRP). Initially, about 100 billion XRP were released. In 2017, 55 million of these coins were locked up.
   They are released periodically to increase the circulating supply and maintain liquidity.

In addition, every time you make a transaction using XRP, you have to pay a transaction fee. This fee is then burned to enhance the coin’s deflationary nature.

1. PancakeSwap’s CAKE lacks a maximum supply, but it uses a coin burning method to continuously manage its supply. Its market supply decreases by -500,400 daily, and by -18 per block.

2. In each block, a portion of the transaction fees for each Polygon is burned, providing continuous support for the value of MATIC.

3. This crypto asset, SAFEMOON, charges a 10% fee on each transaction, and 2.5% of this fee is sold for BNB (for burning).

4. Just like Bitcoin The SOL of Solana is a coin characterized by both inflation and deflation.
   Its deflationary nature exists due to its transaction fees.

5. After being reduced to 101,673,029,723, Tron’s TRX transitioned from an inflation coin to a deflation coin in April 2021.

Other Deflationary Crypto Assets include Ethereum Classic (ETC), Bomb (BOMB), Tenset (10SET), Filecoin (FIL), and Nuke (NUKE).

Methods to short Crypto Assets

There are two standard methods for clearing coins from the market.

Buyback and Burn

By this method, a company purchases a large number of its coins from the market and burns them by sending the crypto assets to a dead address. This process destroys the crypto assets, which in turn eliminates the circulating supply of that crypto asset.
In addition to BNB, other deflationary crypto assets such as FTT and CAKE also use this method.

Burn in trading

Here, the contract for Crypto Assets clearly states that the tax quotas collected from on-chain transactions will be burned. The success of this method largely depends on the trading volume. Deductions occur only when transactions take place.
BNB, SAFEMOOD, and HyperJump are the top Crypto Assets applying this method.

Conclusion

The currency of inflation and deflation is strictly linked to the traditional economic settings of inflation and deflation. The value of inflationary or deflationary Crypto Assets depends on the percentage of their supply.

Unlike traditional economic setups, higher Inflation rates reduce the value of currency, while the Crypto Assets space is continually evolving.
The infinite market supply can be easily accounted for, where market capitalization continues to advance, and their Crypto Assets become Deflation.