'Understanding Inflationary Bias in DeFi' cc: ItsBillysan PSWAPCommunity sora_xor defi cognitivebias
is a well-known pattern of deviation from a rational judgment or conclusion. So everybody creates his own permanent bias through their experience and previous knowledge. And of course, this also happens in DeFi: every day. We can choose examples of successful results with incorrect arguments that many times lead us to an irrational judgment misaligned with the arguments.
Then we have the supply of the tokens. Each DeFi user will have a concrete experience according to the projects where he will have invested in the past, with a concrete win/loss track record that will auto-fulfill his prophecy, in this case, regarding the supply.Fixed The biggest bias here is that an increase in supply will collude sooner or later in a lower price, as you have more tokens they will have less value/price.
Many DeFi participants are using this information, together with their own experience and profit/loss over the years to rise conclusions to use in the next bull run.What is the limit of the supply? SORA brings to the table new factors that make this kind of judgment biased and irrational. And will demonstrate empirically that an increase in supply doesn’t mean a price decrease.For example, in ETH and BTC, it is allocated to miners, that will decide to sell according to their production cost and profit targets. If talking about Fiat currencies, it’s a bit different, as the new supply is allocated normally via commercial banks lending, into stock and financial markets.
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