Why the reward token drops as fast as the rewards arrive

A farm paid rewards in its own token at a high rate. Recipients, wanting stable value, sold the reward token as fast as they received it. That constant selling pressure pushed the token’s price steadily down, so each week’s reward was worth less than the last. The emission funding the yield was also the supply crushing the price. The higher the advertised rate, the faster the token was printed and dumped, and the faster the reward’s value decayed toward nothing.

What everyone sees

A depositor sees a high reward rate and reads high earnings, focusing on the quantity of tokens received. The rate dominates the decision. The depositor assumes each reward token holds its value, and does not connect his own intention to sell — shared by every other recipient — with the price decline that will make the next reward, and the one after, progressively worthless.

What is actually happening

Emission-funded rewards create structural sell pressure: recipients who value stability sell the reward token, and in aggregate this selling depresses the price roughly in proportion to the emission rate. Token-economics research describes this reflexive loop, where a high nominal yield accelerates the very issuance and dumping that erode the token’s value, so the real return trends toward zero even as the advertised rate stays high. The rate and the decline are two faces of the same emission.

Why it stays hidden

The hidden mechanism is the reflexive loop between yield and price. The reward’s quantity is visible and its funding source — emission — is invisible, so the depositor sees earnings without seeing the dumping that offsets them. Each recipient’s rational sale contributes to a collective decline none intends, and the higher the rate, the tighter the loop, until the yield is nominal and the value is gone.