What is the purpose of a sinking fund in the cryptocurrency industry?

1 answers

• Dec 25, 2021 · 3 years ago
  A sinking fund in the cryptocurrency industry is like a secret stash of tokens that a project keeps hidden away. It's like a rainy day fund, but for tokens. The purpose of this fund is to buy back the project's own tokens from the market. By doing so, the project can control the supply of the token and potentially increase its value. It's a way for the project to show confidence in its own token and create a sense of scarcity. The sinking fund can also be used to reward early investors or loyal token holders. So, think of a sinking fund as a strategic tool that projects use to manage their token's supply and keep things interesting in the cryptocurrency industry.
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