Dilution Modeling

Dilution modeling is the mathematical process of calculating how future token releases will affect the value of current holdings. It involves projecting the circulating supply over time based on vesting schedules and emission rates.

By comparing this to projected network usage or revenue, analysts can estimate the potential impact on price. This is a critical exercise for assessing long-term investment viability.

It helps in identifying projects that have unsustainable inflation rates. Dilution modeling requires a deep understanding of the protocol's economic architecture.

It is a fundamental tool for rigorous quantitative analysis.