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Supply is a factor that directly affects the price in every field, and its impact on the price of cryptocurrencies is felt very quickly. Investors who can trade 24/7 immediately price in developments that will change the market balance for the cryptocurrency in question. A recent announcement for ENJ Coin encouraged sellers, leading to a price drop.
Why Is ENJ Coin Declining?
The team announced a reward pool a few minutes ago to secure the Enjin Blockchain following the token transition that started on September 13. Accordingly, 250 million Enjin Coin (ENJ) will be distributed from the early governance rewards pool in 10 equal installments starting from January 15, 2024.
To encourage the community to stake, the team is announcing a significant incentive that will increase the circulating supply. If there are no stakers in PoS networks, the network is not secure, and high participation in this regard is important. Rewards will start from Block 3,247,000 and are expected to be released in 10 equal installments starting approximately January 15, 2024. Each time, 25 million tokens will enter circulation, creating a risk of sale.
The Enjin Blockchain currently consists of the Enjin Relaychain and Enjin Matrixchain, and transactions are processed on the Enjin Relaychain. Enjin Relaychain transactions are processed by validators. To ensure the security of transactions, they must be processed by multiple validators. The Enjin Blockchain has an annual token inflation rate of 4.8927482% to support network governance, and new tokens are released each period.
ENJ Coin Commentary
Although this development may be negative for the supply in the short term, it supports network security and stake participation in the long term. That is, during the 1-year additional unlocking period, a significant portion of the new and old supply may continue to be locked because the compound stake income will be attractive to validators. The real issue should be what the ENJ Coin team will do when the stake reward pool is depleted.
At the time of writing, ENJ Coin, which was finding buyers at $0.311, turned its direction downwards with BTC sales after reaching a peak of $0.37. The twice-tested $0.3 support is strong and can remain in place for now if BTC does not suffer a significant loss.
However, if the support is lost, sales could continue down to $0.275 and $0.2.
