A deflationary asset is one whose supply decreases over time, which can lead to an increase in value. In cryptocurrencies, this typically occurs through mechanisms like token burns or caps on total supply.For example, Bitcoin has a fixed supply limit of 21 million coins. As more people use and invest in Bitcoin, the scarcity can drive up demand, potentially increasing its value. This contrasts with inflationary assets, where increasing supply can lead to a decrease in value.Another common approach to create deflationary pressure is through token burns, where a portion of tokens is permanently removed from circulation. This reduces the overall supply and can enhance the scarcity of remaining tokens.Investors might be attracted to deflationary assets as they offer the potential for appreciation over time, especially in a world where monetary inflation is a concern. However, the actual performance can vary based on market dynamics, utility, and user adoption.