What you should know:

In case you didn't know Polkadot has high inflation. On Dec. 31st 2020 Polkadot had ~895K in circulating supply, as of Jan. 20th 2023 Dot has a circulating supply of ~1,159K an increase of ~23% over two years or roughly 11% a year. Now to the benefit of DOT holders inflation can be beaten by staking Polkadot with staking rewards currently about 15% annually. Meaning you can get more DOT than the annual inflation rate by staking your DOT.

The curious case against Polkadot.

To understand what this inflation means for Polkadot we have to take a really basic look at price and marketcap.

On Dec. 31st 2020, Polkadot had a marketcap of $7.28B, a price of $8.13 and a marketcap rank of 6.

https://web.archive.org/web/20201231174731/https://coinmarketcap.com/

Today Jan. 20th 2023, Polkadot has a marketcap of 7.18B, a price of $6.20 and a marketcap rank of 12.

https://coinmarketcap.com/

What this means is thanks to inflation the price has dropped roughly 23% in about two years and the marketcap has stayed constant. Dot has high sustained inflation, yes you can still "beat it" via staking but the pressure still exists and anyone investing in DOT should know about this, as the price is not guaranteed to move relative to inflation.

Conclusion

Due to that high rate of inflation you can deduce a few considerations

• Dot is not a crypto you want to hold if you aren't staking it.
• Holding it long term in a bear market will likely cause you to see higher than average losses (compared to other crypto assets) thanks to the inflation rate creating sustained selling pressure.
• In an environment where inflation is so high, DOT maintains it's total marketcap at the expense of it's price.
• A large number of DOT holders are not staking or the rewards could not be ~1.4X the inflation rate.

Last Important Note: "Beating Inflation" does not guarantee you'll profit as that depends separately on price movement. It just means you will get more total Dot relative to the total supply increase.

For those curious about what "crypto" looked like on 12/31/2020 this is for you. BTC was about $28K and ETH was about $740.

https://web.archive.org/web/20201231174731/https://coinmarketcap.com/