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For most of 2022, the talk and focus of government officials and economists have been on inflation. Inflation's effects are still being debated and some have stated that we have already hit peak inflation. The truth though is that we will not know the answer for months after the fact. There might be growing evidence that the pace is at least slowing down it has not stopped and continues to impact the everyday person.
During the last few weeks, more and more companies have been releasing their earnings and it has been a mixed bag, to say the least. All of the major companies though have pointed to the growing impact and risk of inflation and tried to predict the course it will run for the rest of the year. Quite a few companies have announced hiring freezes or cuts to their advertising budgets.
For BRAVE users that either earn a large amount of BAT or find BAT to be an important passive income stream, this is not good news. Brave's Basic Attention Token or BAT is funded by advertising revenue. This means that when companies start spending less on advertising there is less money going into BAT and thus less is being distributed to users.
We have seen what can happen when advertising revenue dries up. When the pandemic hit the shock it caused the markets across the world led to advertising budgets being slashed to stop the cash hemorrhage. This really threw BAT for a loop for a couple of months however as the economy came back and companies piled in money for advertising BAT bounced back as well. Compared to last time this time is much less sudden and so adjustments can be made accordingly.
Overall the advertising inflows though are going to start going down as more and more companies either hold or decrease their budgets. Since BAT is set up as a trickle-down distribution model this means that the decrease in the topline or advertising funds will lead to a decrease in the BAT distribution. On the upside BAT's price is down considerably over the last year and so the amount that the Brave team has to spend on buybacks has decreased as well. This could help offset some of the fall in distribution however distribution will fall due to not having near the number of ads that they once had.
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