Decoding the quirky economics of DOGE coin! Musk: Inflation is actually an advantage, and the founder also supports it

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In the world of DOGE, Elon Musk has always been a true 'believer'. The richest man in the world, CEO of Tesla and founder of SpaceX, is now also the Secretary of Efficiency of the US government. Recently, he stood up for the inflation model of DOGE on Twitter (now renamed X), stating that its 'seemingly eccentric' token economics has instead become one of its major advantages.

Image Source: X

The reason for the discussion is a post by Billy Markus, co-founder of DOGE, explaining how to adjust the token economics of DOGE, and even suggesting that developers can initiate a vote to modify everything. As Markus said, "You can change it on the spot, make a request, convince the community and miners to use the new version. Don't bother me now."

While Musk came out in direct support, stating that the 'stability' of such inflationary models is actually a major feature of DOGE, not a flaw. In response to Markus' proposal, he humorously replied, 'I think that's the charm of DOGE.'

Unlimited inflation: What's special about DOGE?

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When many people hear the word 'inflation', they frown immediately. That's right, the supply of mainstream cryptocurrencies such as BTC and Ethereum is limited, which is also an important reason why they attract investors. However, DOGE is different. Its supply is unlimited - it mints 10,000 new coins every minute. By estimation, DOGE's annual supply can reach up to 5.2 billion coins.

But Musk and Markus have different views on this "seemingly unrestrained" model of inflation. Musk believes that this unlimited supply actually guarantees DOGE's "Liquidity", and this "smooth" inflation is its unique selling point from mainstream coins such as BTC and Ethereum.

"This is not a bug, it's a feature," Musk said.

Markus also stated that the economic model of DOGE makes it an "ideal currency" that can adapt to a wider range of applications, especially in consumer payments, avoiding the hesitation of consumers caused by the large Fluctuation in price like BTC.

Strange tokenomics, instead became an advantage?

DOGE's 'infinite supply' is not just a theoretical academic discussion, it has a history of practical application. Billionaire and crypto pro Mark Cuban pointed out as early as 2021 that this peculiar economic design is indeed a major advantage for DOGE to serve as a means of payment.

Cuban said, "DOGE is easy for people to accept because it is not as expensive as BTC, nor as complicated as Ethereum. If you have $100 in your hand and buy BTC or Ethereum, you may only get a little bit. But DOGE is different, it is cheap in price, and it is easy to buy goods after appreciation. This intuitive feeling makes DOGE an ideal payment method."

Cuban also revealed that as early as 2021, when he was the owner of the Dallas Mavericks, the team had started accepting DOGE as a payment method for tickets and merchandise. And behind all this is the advantage of DOGE being "easy to use".

Elon Musk and DOGE: From Hobby to Strategy

It has to be said that the relationship between Elon Musk and DOGE has long surpassed the simple 'investment' category. Since 2018, Musk has been a loyal fan of DOGE. Almost every time he speaks on social media, he mentions DOGE and constantly amplifies its potential. What's even more interesting is that Musk has said that he is not actively involved in the encryption industry, but simply 'likes a bit' of DOGE for a simple reason: 'It has dogs and internet memes, and I like all these things.'

This may sound a bit light-hearted, but in fact, Musk's passion for DOGE has never waned, and sometimes even drives the Fluctuation of DOGE's price, becoming a "barometer" of the market. In 2019, DOGE's developers exclusively revealed that they had collaborated with Musk to make DOGE a practical payment Crypto Assets.

The future of DOGE: Inflation Advantage or Bubble Risk?

Obviously, DOGE's "bizarre" economic model, for different people, can be an advantage or a disadvantage. For some investors, DOGE's inflation has brought a "long-tail effect", and its liquidity in retail payments makes it a convenient "tool coin"; For others, such inflation also means that its value may come under pressure for a long time, lacking the scarcity of BTC.

However, with the continued follow of Musk and other encryption industry leaders, the market position of DOGE will undoubtedly continue to maintain its popularity. In the future, whether DOGE will become a mainstream "payment tool" or just a "meme coin" remains a hot topic in the encryption industry.

The price is far from reaching historical highs, and the open interest has reached a new record high.

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Currently, the price of DOGE is $0.39, with an astonishing increase of 350% in the past three months. DOGE once reached a peak of $0.74 in history, which is about 89% away from the current price. However, considering the continuous issuance of DOGE in recent years, if we calculate based on market capitalization as the benchmark, DOGE needs approximately a 54% increase to return to its historical peak.

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It is worth mentioning that the open interest of DOGE in the exchange contracts has reached a historical high. The peak open interest of DOGE contracts in 2021 was only 0.9 billion US dollars, while the current open interest of DOGE contracts is close to 3 billion US dollars. This means that the future trend of DOGE may be more influenced by the futures market.

Overall, the future of DOGE has become more uncertain. Although its market performance is strong, the increasing issuance mechanism also poses more challenges for it to return to historical highs in the future. In the highly volatile crypto market, it remains to be seen whether DOGE can break through the bottleneck and reach historical highs again, which requires time to verify.

Disclaimer: This article does not constitute investment advice. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their specific circumstances and comply with relevant laws and regulations in their country or region.

This article is authorized for reprint from: "MarsBit"

Original Author: Alvis, Mars Finance

The article titled 'Analysis of the DOGE Coin's eccentric economics! Musk: Inflation is actually an advantage, and the founder also supports it' was first published in 'encryption city'.