Chinese analyst Jae spoke about the altcoin that has recently been making headlines with its newly announced initiative.
On January 14th, the DFINITY Foundation announced a highly aggressive deflation plan for Internet Computer (ICP) in its new token economy white paper, “Mission 70.” According to the plan, ICP’s annual inflation rate will be reduced by 70% by the end of 2026. Following the announcement, the ICP price surged by over 30% during the day, attracting significant market attention.
However, ICP is still trading 99% below its all-time high price.
According to Chinese analyst Jae, this price movement is not just a short-term market reaction, but a repricing of Internet Computer’s core value proposition. For DFINITY, this move represents a shift from a highly subsidized infrastructure to a self-sustaining value engine, in line with its vision of “rebuilding the internet.”
The published white paper, prepared by founder Dominic Williams, stands out not as a classic project update, but as a comprehensive fiscal tightening program offered to token holders. The goal is to reduce ICP’s nominal inflation to 70% or higher by 2026 through a reduction in supply and an increase in demand.
Currently, ICP’s annual inflation is around 9.72%. A significant portion of this stems from governance voting rewards and node provider incentives. Under Mission 70, changes to NNS incentive parameters aim for an absolute token reduction of approximately 44% on the supply side. According to Jae, this approach aims to increase risk-adjusted returns in the long term through lower inflation and higher scarcity, at the cost of sacrificing short-term gains.
According to the analysis, supply-side cuts alone are not enough to reach the 70% target. Therefore, DFINITY is focusing on the Caffeine AI platform on the demand side. Caffeine, which enables natural language application development through large on-chain language models, aims to create high Cycles consumption on the ICP network. The creation of Cycles through ICP burning offers a mechanism that could create persistent deflationary pressure on the token as actual usage on the network increases.
However, factors such as the relatively small size of the DeFi ecosystem, limited liquidity, and low user numbers stand out as the main risks facing ICP.
According to the analyst, the success of Mission 70 depends on two critical conditions: that reducing incentives doesn’t drive node providers away from the ecosystem, and that Caffeine AI generates Cycles burning on the expected scale. Otherwise, the deflation target could put pressure on ecosystem vitality.
*This is not investment advice.
