Grayscale Warns Crypto Token Inflation Can Wipe Out Holder Rewards

Crypto applications can generate earnings, yet growing token supplies can reduce the benefits reaching holders. Grayscale’s new analysis examines how earnings and capital returns can support valuations beyond market narratives. Crypto investors can assess income-generating protocols by comparing earnings and distributions with market capitalization while accounting for supply inflation, Grayscale stated. Zach Pandl, head of research at the digital asset manager, outlined the framework in Grayscale’s earnings-based valuation approach , published Oct. 21. Trading, lending, and other financial activities generate fees for onchain applications, with payments to liquidity providers, lenders, and other suppliers representing costs. Subtracting those expenses leaves earnings that can be compared across protocols. Pandl wrote: Tokenholder yield adds staking rewards and buybacks, subtracts issuance, and divides the result by circulating market capitalization.

BeCrypto News shows a short excerpt and links to the publisher. The full report belongs to Bitcoin.com News.