When you begin to explore the world of Defi, you need to learn about token emissions and how they impact token supply & potentially dilute token value.
In simple terms, Emission means how quickly new cryptocurrencies are released.
For some cryptocurrencies, there is no set rate of emission. This means additional units can be created on-demand.
Just because you see a token's total supply on a tracking tool like CoinMarketCap doesn't necessarily mean that's all there is. Total supply does not equal max supply.
When you chase high APR/APY, understand that these rewards are usually high because of token supply & emission.
They simply do one thing: dilute the value of the tokens you already hold.
High APR/APY =High emission rate= increased tokens in circulation.
When there's not enough demand to match up, prices keep spiraling down because the only thing token holders/ stakers will do is SELL, SELL & SELL.
Of course they have to recoup losses; and in a lot of cases, the reward tokens may not even be enough to compensate, especially in cases of severe market corrections.
Tokens like this lack the scarcity factor.
Don’t jump into staking pools because of high APR/APY.
Be DeFi-smart!