Moonbeam targets a 5% annual inflation rate and, as such, has an uncapped token supply.
The purpose of inflation in Moonbeam is to pay for ongoing security needs of the network. The primary security budget items are to pay for a parachain slot on an ongoing basis, and to incentivize collators to provide collation (block production) services to support the Moonbeam network. Of the 5% inflation, 1% will go towards incentivizing collators and 1.5% will go to the parachain bond reserve to accumulate on chain funds to pay for a parachain slot in perpetuity. The remaining 2.5% will go to users that stake their GLMR tokens and help power the collator selection process.
Fees on Moonbeam related to transactions and smart contract execution will be handled in two ways. 80% of the spent fees will be burned, which acts as a deflationary force and accrues value to existing GLMR holders based on increased utilization of the network. 20% of the spent fees will go to the on chain treasury which can be allocated via onchain governance to projects and initiatives which further adoption and engagement with the network.