Asset Dilution Risk

Asset dilution risk is the potential for an investor's ownership share or the value of their holdings to be reduced by the issuance of new tokens. This risk is particularly high in protocols with aggressive inflation schedules or large, periodic token unlocks for early investors and team members.

Investors must evaluate the vesting schedules and total supply growth to determine the potential impact on the token price. Managing this risk involves diversifying portfolios and understanding the tokenomics of the project, including the potential for future governance decisions to change the issuance schedule.

It is a fundamental consideration for anyone investing in digital assets.