Cardano's staking rewards are a fairly consistent 5.5%

Annual inflation of fiat currencies varies by time and country. Unless or until the volatility of ADA drops dramatically it will have far more impact on offsetting fiat inflation than staking rewards.

It is a bit like asking how is inflation in Australia offsetting inflation in the USA.

Cardano's staking rewards are a fairly consistent 5.5%

Annual inflation of fiat currencies varies by time and country. Unless or until the volatility of ADA drops dramatically it will have far more impact on offsetting fiat inflation than staking rewards.

It is a bit like asking how is inflation in Australia offsetting inflation in the USA.

Cardano’s monetary policy addresses two issues:

• The necessity to offer rewards for people who participate in the network

• Funding the treasury

Rewards

The expansion and future improvement of the Cardano blockchain will be greatly influenced by its community, who need to be incentivized through rewards to participate in Cardano’s development.

Staking rewards for delegators and stake pool operators come from two sources:

• Transaction fees - fees from every transaction from all blocks produced during every epoch go into a virtual ‘pot’. A fixed percentage (ρ) of the remaining ada reserves is added to that pot.

• Monetary expansion - a certain percentage (τ) of the pot is sent to the treasury, and the rest is used as epoch rewards.

This system is designed to ensure that the portion of rewards taken from the reserves is high at the beginning, when transaction numbers are still relatively low. This incentivizes early adopters to move quickly to benefit from high initial rewards. Over time, and as the number of transactions increases, additional fees will compensate for smaller reserves.

This mechanism also ensures that available rewards are predictable and do not vary dramatically. Instead, rewards change gradually. The fixed percentage taken from remaining reserves every epoch guarantees a smooth exponential decline.