A lot of tokens on DEXs follow this basic price action. During bull markets, volume is high, underlying assets are high, a percentage of volume buys the native token which drives the price up, and the token inflates to incentivize liquidity providers. Then during bear markets or when volume is low, that inflation outpaces the fees that the platform feeds back into the token and there is significant value loss to holders. Most of the big players essentially have uncapped inflation.
It seems like something like CAKE would encourage a lot of short term trading because there is a lot of money to be made when the market is hot, but also a guaranteed harsh inflation during slower periods. I think the space is still pretty young, but in a lot of ways the uncapped inflation seems like it heavily discourages holding the native asset, and instead is something that should be dumped as soon as it’s minted, but it also seems like a high volatility reward that doesn’t appreciate over time would slowly strip away the ability of the platform to attract liquidity.
Thoughts on native tokenomics? Am I wrong about having an appreciating asset as a native token being worth pursuing?