Thread by @CryptoGirlNova

1) $AZERO is praised for its privacy features and fast blockchain.

People's main concern however is it's inflation mechanic.

Is it actually all that bad? Can the project survive with it?

A thread 🧵 on #Azero's yearly inflation.

Read on 👇

@Aleph__Zero

2) Inflation.

From an investment point of view inflation is almost always seen in a negative light.

The supply of an asset or currency increases which makes the value decrease if there's no extra buyers activity to compensate the amount of supply increase.

3) From another perspective inflation can also be highly NEEDED for maintaining sustainable growth.

There's a reason why some of the most succesfull blockchains of today (Ethereum, Solana, Cosmos,...) deliberately chose to implement this mechanic.

And they all did great!

4) There's no single project that would chose for inflation on purpose if there weren't any benefits attached to it.

Azero is a proof-of-stake blockchain.

In POS protocols, a certain group of users called validators and nominators are responsible for the system’s functioning.

5) Validators verify the truthfulness of the transactions, whereas nominators vouch for the validator’s honesty.

Both groups involved must stake their tokens, introducing a financial incentive for remaining honest.

6) For assisting validators and nominators need to be compensated.

This is where the inflation mechanic kicks in.

Aleph Zero has a yearly 10% supply increase.

This supply isn't just distributed to the team to profit from.

90% of it is solely distributed to stakers.

7) 10% will go to the ecosystem treasury.

The ecosystem treasury will be used to ensure the ongoing development, growth and sustainability of Aleph Zero.

An example of this is offering funds to new developers choosing to build on Aleph Zero.

Providing incentives.

8) So basically on a yearly base:

-9% inflation to stakers
-1% inflation to treasury

Aleph Zero believes that inflation can be a good thing IF its kept under control and if it is used for the right reasons.

9) Aleph Zero ensures that inflating the circulating supply of the tokens serves only to further the best interests of the community and the network they are collectively building.

Their involvement with Substrate will guarantee a safe policy to help avoid inflation’s impact.

10) Also important to mention that the inflation mechanic number can be CHANGED.

The decentralized Governance can vote to decrease this number.

Important to note is that this will decrease the staking rewards this way but the community at least will decide.

11) Also equally important is that IF you are staking your tokens there is 0% inflation to your holdings.

The yearly supply is increased by 10% but so is your bag.

Inflation only affects you if your own holdings are not increasing.

12) Considering more than 70% of all holders staked their Azero tokens means that they are totally unaffected by this.

For the remaining 30% that are not staking there is hardly any reason for concern.

It would take 10 years to double the supply.

13) This means that if you truly think azero would only do a x2 over the course of 10 years you wouldn't have been able to benefit from this.

In today's market all succesfull projects usually have done 10-100x over the course of 2 years.

14) If Aleph Zero is succesfull and does anything more then x2 in 10 years they WILL profit.

See how Ethereum, Solana, Cosmos,... were still able to profit?

This ONLY applies to non-stakers AND if the inflation numbers are unchanged by the decentralized Governance.

15) Still doubting the mechanic will hinder Aleph Zero's success? 😏

16) If you want to keep up to date to most of my content and interesting projects give me a follow @CryptoGirlNova.

I research the communities top voted cryptocurrency every sunday so you can keep track of all the most exciting projects.

Your favorite writer Nova ❤️

17) If you had value from this and liked this thread, it would really bring a smile to my face if you could retweet the first post so this can help as many people as possible.

Everyone deserves free knowledge 📘

Love you all ❤️

First post 👇

https://twitter.com/CryptoGirlNova/status/1559633848669016065?t=BYZ7yXkYdC4QpC70J-LWcQ&s=19