Minting Inflation

Plenny utilizes continuous issuance while keeping the maximum supply of tokens proportional and in line with organic growth. Minting new token results in additional supply that adds inflationary effects to the token economy but also mutes deflationary impact. To ensure organic growth, there is a fixed daily inflation added to the Treasury HODL. The annual inflation is equal to 2.5% of the token supply.

Inflation is a triggered event controlled via smart contracts. The RePLENishment Trigger interacts with a built-in minting mechanism to generate additional token. This means, for example, that the value of 2.5% per year is newly minted when the replenishment of the Treasury HODL takes place. The value is prorated to the block time of Ethereum L1 (e.g. an average block time of ≈13 seconds is ≈6,500 blocks per day). New token is minted only for the time period determined via the RePLENishment Trigger. In summary:

• To ensure organic growth, minting inflation is complemented with providing liquidity (i.e. burning and buybacks). In this scenario, the circulating supply is extended pro rata.

The replenishment function refills the treasury and offsets the potential risk of exhausting the reserves. It is essential to point out that given the mechanics of the reward distribution, inflation might never reach circulation. For example, if the fees collected in the Treasury HODL are higher than the rewards paid out, the formula for reserve sustainability prevents newly minted token from reaching circulation. If the reserves are low, a percentage but not a fixed amount is given, and fewer rewards are distributed overall. Mathematically, the percentage can never go to zero, so the Treasury HODL can never exhaust.

The inflation amount per block can be adjusted as it is subject to governance voting.