Block Reward Decay

Block reward decay is the mathematical reduction of the tokens issued per block over time, often used in proof-of-work and proof-of-stake blockchains. This decay ensures that the supply growth is controlled and predictable, eventually reaching a maximum supply or a steady-state inflation rate.

By reducing the rewards, the protocol manages the economic pressure of new supply entering the market. This mechanism is essential for maintaining the value proposition of assets that aim to be scarce, such as digital gold.

The decay rate is typically hard-coded into the protocol, providing market participants with certainty about the future supply schedule. Understanding the decay curve is vital for fundamental analysis of long-term token value and market cycles.