Solana’s All-Time High and Inflation Impact
If you’re interested in the world of crypto, you may have heard about Solana (SOL). On November 6, 2021, SOL reached its all-time high price of $259.96, making waves in the market. Not only that, but it also achieved an all-time high market cap of $80.965 billion on the same date.
The Unique Supply Inflation Schedule of Solana
Solana stands out from other cryptocurrencies due to its novel supply inflation schedule. This schedule includes an Initial Inflation Rate of 8%, which began in February 2021. It also features a yearly Disinflation Rate of -15%, gradually reducing SOL’s supply inflation to a fixed value known as the Long-term Inflation Rate, set at 1.5% per year.
The Impact of Inflation on Solana’s Value
Despite having a controlled and diminishing supply inflation rate, Solana is not immune to the effects of token inflation. Based on data retrieved by Finbold on September 6, with a circulating supply of approximately 408.949 million SOL, the value of one Solana would be close to $198. This is $61.96 (23.8%) less than its all-time high price in US dollars.
Staking APY and Inflation Rate
Interestingly, although the current yearly inflation rate for Solana should be around 5% to 5.5%, the nominal staking APY stands at 7.57%. According to Solana Beach Block Explorer, the staking APY varies based on the total staked amount of SOL, weighted by the current inflation rate.
Influence of Vested Tokens on Solana’s Value
In addition to the circulating and maximum supply, Solana also has a vested (or locked) supply of 147.751 million SOL. These tokens will be gradually released over time by Solana Labs, Solana Foundation, team members, and private investors. This inflation, or monetary expansion, will impact the value of the SOL token.
How Would Other Cryptocurrencies Perform at Their All-Time High Market Cap?
- XRP would trade at this price if it hits its all-time high market cap.
- Ethereum would trade at this price if it hits its all-time high market cap.
- Dogecoin would trade at this price if it hits its all-time high market cap.
- SHIB would trade at this price if it hits its all-time high market cap.
- Cardano would trade at this price if it hits its all-time high market cap.
- Bitcoin would trade at this price if it hits its all-time high market cap.
Hot Take: The Importance of Considering Inflation in Crypto Investments
Investing in cryptocurrencies is exciting, but it’s crucial to understand the potential impact of inflation on their value. Solana’s journey highlights the significance of controlled supply inflation and its influence on token prices. As an investor, it’s essential to consider these factors and conduct thorough research before making any investment decisions. Remember, investing in crypto involves risk, and it’s always wise to approach it with caution.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative, and your capital is at risk.
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