Hearing mintable tokens, I am sure you have heard of a similar term called mineable tokens as well. So what are they? Are they different? What are mintable tokens? Let’s find out.
Understanding Mintable Tokens
It is a token with non-fixed total supply, permitting the token issuer to mint or increase their tokens whenever they want. Mintable tokens are the tokens which are established without performing any underlying consensus related activity. These tokens are mostly formed on smart contract platforms.
On a smaller level, smart contracts have a function to create new tokens based on the predetermined supply. As and when the function is triggered, new tokens are formed which are then issued in the market.
The Supply of Mintable Tokens Lies in two Categories:
- Fixed Supply: This model is used to create shortages that will grow the value of the underlying Fixed supply is often called deflationary because once it reaches the supply mark, no new tokens are created and in case the demand rises, the price of the token will increase.
- Continuous Supply: This token model is inflationary, which means new tokens are created on a regular interval for a purpose such as utility. The main focal point on a continuous supply token model is to grow the underlying utility and benefits rather than increasing the price. This model is also used by stable coins that upkeep a 1:1 peg with the US dollar, and the protocol ensures that the token doesn’t go up or down from the $1
Examples of Mintable Tokens
There are two most prominent examples of mintable tokens: NFTs and Stable coins. Let’s draw some light on these.
If you’re an ardent follower of crypto you may have heard about this term. NFT stands for Non-Fungible Tokens’. They are non-fungible meaning they are one of a kind and can’t be replaced with something else or get divided into sub-parts.
Stablecoins are the type of minted tokens that maintain a 1:1 peg with the US dollar. Each Stablecoin has a worth of $1, and the protocol gets adjusted to fit the $1 peg. Most Stablecoins follow the continuous supply model where the supply is adjusted to maintain the $1 peg.
Advantages associated with mintable tokens
There a number of advantages of using mintable tokens, some of which are listed below:
- This feature allows the user to form a token without fixing the total supply which makes it an apt choice.
- Minting is an added feature for creating the tokens where the new tokens can be added to the
Minting new tokens helps developers and companies to collect funds for their projects and to form a model which is economic and for their application to incentivise participants.
Having said that, not every token is deserved to be invested in and hence the investors should look and observe closely before investing in any given token. PlatinX provides the best crypto trading software, crypto arbitrage software and much more.
PlatinX here vows to provide you with a simple approach to a complex crypto world with our expertise in this field which will be instrumental in your journey of achieving your financial goals. Visit PlatinX for more insight into our services.