To understand the functionality of the Nervos DAO, it is essential to grasp token issuance on the Nervos CKB. CKByte issuance includes, in addition to the CKBytes generated in the genesis block:

Base Issuance:
The value of the CKByte will be low at the network's first launch, which is expected in blockchain tech, but this means that network security will be minimal at first. To make Nervos a safe and appealing for asset storage, the security must be temporarily subsidized through a process called as Base Issuance.

Base Issuance is comparable to the Bitcoin mining process. Miners are compensated in CKBytes for providing computer resources to execute transactions and safeguard the network. Over time, the assets stored on the network will gain value, necessitating fewer subsidies.

The cost of base issuance is covered for employing a predetermined inflationary schedule. The subsidy amount is halved every four years, eventually terminating when the threshold of 33.6 billion CKBytes is reached. This results in a transparent and predictable monetary policy.

Secondary Issuance:
After the Base Issuance, some have speculated that the incentive to miners will not provide adequate security if it is only paid with fees from Cycles and Transactions. Additionally, miners require long-term incentives that are directly aligned with ensuring the data in Nervos is preserved. Secondary Issuance is a process that addresses both of these problems.

Secondary Issuance is subject to a predetermined inflation rate of 1.344 billion CKBytes every year. This sum remains constant. Secondary Issuance, unlike Base Issuance, does not effect everyone on the network. These payments are distributed based on CKByte usage to miners, Nervos DAO depositors, and a treasury fund (which is being burned until the ecosystem fund in the genesis block is depleted).

This means that your assets will never be diminished by this secondary issuance if you deposit in the Nervos DAO.

Further Reading: