In this article, Stephen Hodgkiss explores the topic of token creation on the Stellar blockchain, specifically discussing the differences between creating tokens with a limited supply versus an unlimited supply. Hodgkiss begins by explaining that the Stellar network allows users to create custom tokens, which can be used to represent assets or currencies. These tokens can be created with a specific supply, either limited or unlimited, depending on the needs of the token issuer. Hodgkiss then delves into the advantages and disadvantages of each type of token supply. Limited supply tokens are designed to be scarce, with a fixed number of tokens in existence. This can increase their value over time and make them more attractive to investors. However, limited supply tokens can also be prone to market manipulation, as a few large holders can control the supply and demand of the token. On the other hand, unlimited supply tokens can be useful for currencies or tokens that are intended for wide circulation. These tokens can be created in large quantities, ensuring that there is always enough supply to meet demand. However, this can also lead to inflation and a decrease in the token's value over time. Hodgkiss also discusses the role of token burns, which is the process of permanently removing tokens from circulation. This can be done to increase the value of a limited supply token, as it reduces the overall supply and increases scarcity. Token burns are not possible with unlimited supply tokens, as new tokens can always be created to replace those that are burned. Finally, Hodgkiss concludes that the decision to create a token with a limited or unlimited supply ultimately depends on the specific use case and goals of the token issuer. Both types of supply have their advantages and disadvantages, and it is up to the issuer to weigh these factors and make an informed decision. In summary, Hodgkiss provides a clear and concise overview of the differences between creating tokens with a limited or unlimited supply on the Stellar blockchain. He discusses the advantages and disadvantages of each supply type, as well as the role of token burns in increasing the value of limited supply tokens. Overall, this article is a helpful resource for anyone looking to create their own custom tokens on the Stellar network.

1. Reading Time: 2 minutes
An unlimited supply of a token on the Stellar network with a fixed price can have various pros
and cons. It’s important to understand these implications when creating or investing in such
tokens.
Pros:
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Token Creation Supply and Demand
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by Stephen Hodgkiss
BLOCKCHAIN STELLAR
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2. . Liquidity: With an unlimited supply, there will be ample liquidity in the market for the
token, making it easier for users to buy or sell it without impacting the price
significantly.
. Price Stability: Since the token has a fixed price, it can act as a stable asset, providing a
hedge against market volatility. This can be particularly useful in times of economic
uncertainty or for transactions requiring a stable medium of exchange.
. Easier Adoption: A fixed-price token with unlimited supply can encourage adoption by
users, as they don’t need to worry about price fluctuations, making it suitable for
various use cases like payments, remittances, or stablecoin pegs.
. Inflation Resistance: If the fixed price is tied to an inflation-resistant asset or index, the
unlimited supply token could maintain its purchasing power over time, providing a level
of protection against inflation for holders.
Cons:
. Potential Dilution: With an unlimited supply, there’s a risk of dilution for existing token
holders. As more tokens are issued, the value of each individual token could decrease if
the demand doesn’t keep up with the supply.
. Centralization Risk: An unlimited supply can lead to centralization if a single entity or a
small group of entities control the issuance of the token. This can result in manipulation
of supply or other actions that could undermine trust in the token’s stability.
. Limited Incentives for Investment: Since the token’s price is fixed, there may be limited
opportunities for capital appreciation. This could reduce incentives for investors to
hold the token over the long term, potentially impacting its overall adoption and utility.
. Dependence on Price Peg: The token’s value is reliant on maintaining a stable price
peg, which could be subject to fluctuations due to external factors or the failure of the
mechanism used to maintain the peg. This could lead to loss of confidence in the
token’s stability.
In summary, an unlimited supply fixed-price token on the Stellar network can o er benefits
such as liquidity, price stability, and easier adoption. However, it also has drawbacks,
including potential dilution, centralization risk, limited investment incentives, and
dependence on a stable price peg.
See the Stellar Integration Tools to help you with creating a token on the Stellar Network and
test your ideas for free.
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