Inflation and deflation are two sides of token supply dynamics. Security and growth need incentives; holders want preservation. Protocols balance both through emissions, burns, and fee routing.
Validators and stakers require compensation — inflation is a transfer, not free money. Post-Merge Ethereum can flip deflationary during high usage when burns exceed issuance.
Algorithmic stablecoins and reflexive token models can collapse when confidence breaks — selling reduces backing, triggering more selling. Understand reflexivity before holding inflation-heavy or algorithmic designs.