Inflation and Deflation
MAXX Finance has rigorously back-tested all of the strategies to not only create an amazing DeFi solution, but also a platform that is built to last. Inflation is a feature, not a bug
There is no 'fixed inflation' of the token, we cannot say what the exact annual inflation will be.
Users earn a fixed interest rate based on the length of their stake, which is minted as new tokens when the stake is withdrawn. This is the only way that the MAXX token will inflate.
This means that the actual global inflation is based on how many tokens are minted in any given year, which is impossible to predict. But once the system is up and running, we will have analytics on the current/average global inflation rate.
For these examples, we will start with a token supply of 100bn and presume that every single stakers behavior is identical:
If 10% of the entire supply gets staked at an average rate of 80%, it would mean that the global inflation is 8%. This is because 10bn tokens are staked, and those stakes will earn 8bn in interest. The total supply at the end of the year is 108bn, meaning the token has inflated globally by 8%.
If 20% of the entire supply gets staked at an average rate of 80%, global inflation is 16%. (20bn @ 80% = 16bn)
If 50% of the entire supply gets staked at an average rate of 40%, global inflation is 20%. (50bn @ 40% = 20bn) Obviously staking behavior will vary wildly depending on users, and there will be hundreds of thousands of stakes all earning different APYs, so we can not predict an accurate number at this stage.
We have spent an endless amount of time simulating various tokenomics models, to ensure that runaway inflation is impossible. Other than the daily interest to stakers, no additional tokens will ever be minted.
In order to counteract the variable inflation of the token, we are adding deflationary measures to burn some of the MAXX supply. This will be in the form of Taxes and other staking penalties such as early unstaking penalties. Revenue Generating Utility The most robust way of counterbalancing inflation is through utility. MAXX will be holding validators on multiple different networks, not only does this bring exposure to MAXX in the form of discovery but we also will be generating anywhere between 6-16% APY through this strategy which will essentially go back in the vault and be up for burning.
Burning tokens is one of the most effective ways to drive value back to token holders as it raises each participant's percentage of the total supply.