Dilution

Dilution in cryptocurrency refers to the decrease in the value of existing tokens or coins in circulation due to the introduction of new tokens or coins into the market. This can happen through practices like token issuance or mining.

When new tokens or coins are introduced into the market, it can lead to a larger supply of the cryptocurrency without a corresponding increase in demand. This oversupply can result in a decrease in the value of each individual token or coin.

Dilution can have a negative impact on investors and holders of the cryptocurrency as their holdings may decrease in value. It is important for investors to be aware of dilution risks when considering investing in a particular cryptocurrency.

Overall, dilution is a concept that highlights the importance of understanding the supply dynamics of a cryptocurrency and how the introduction of new tokens or coins can impact its value in the market.