Deflationary tokens are designed to create scarcity, which can drive up the value of the remaining tokens. By reducing the circulating supply, the tokenomics of deflationary tokens are structured to potentially increase the value for holders, as long as demand remains stable or increases. This process is commonly achieved by burning a small percentage of tokens during each transaction or by having a fixed maximum supply that will never be exceeded. Many deflationary tokens are used in decentralized finance (DeFi) projects and token-based ecosystems where value appreciation is important.
