Current State: Economic Implications and Repercussions

NFT Staking and the Keynesian Liquidity Preference Theory

NFT staking has emerged as a cornerstone of the ESB's current utility, offering both intrinsic and transactional value to token holders. This dual purpose mirrors the Keynesian Liquidity Preference Theory. Proposed by the famed economist John Maynard Keynes, this theory suggests that people hold money for three primary reasons: transactions, precaution, and speculation.

For the ESB token, direct ESB staking serves the transactional, precautionary, and speculative motives. Token holders stake their ESB to gain rewards, fulfilling the transactional motive. They also view staking as a precautionary measure, protecting their assets from market volatility and positioning the token as a store of value against potential downturns. Additionally, the speculative motive comes into play as token holders anticipate potential appreciation in the ESB's value over time. By staking and locking in their tokens, they bet on future price increases and the continued growth of the Breeders Zone ecosystem.

Furthermore, the act of staking and the inherent lock-in periods offer a buffer against short-term market fluctuations, adding stability to the token's valuation by reducing the available supply and curbing abrupt price changes.

Monetary Contraction as a Stabilization Mechanism

Recognizing the challenges posed by inflationary pressures and the volatility associated with breedersboxes, Breeders Zone made conscious strategic decisions. We opted to halt certain mechanisms, like the sale of breedersboxes and direct ESB staking, drawing parallels with the Monetary Contraction strategy seen in traditional economies.

In economic parlance, a Monetary Contraction strategy entails a deliberate reduction of the money supply to achieve specific objectives, such as curbing inflation or stabilizing a currency's value. For Breeders Zone, this contraction was aimed at addressing the inflationary pressures that had been building up due to the high APY staking mechanism. By temporarily halting these mechanisms, the ecosystem sought to "tighten the reins" on the ESB supply. The objective was to restore balance, ensuring that the token's intrinsic value wasn't compromised and its purchasing power preserved.