My 2c here. There is an interesting tension here, as deflation can be seen as a virtue as well as a limitation.
Crypto sees deflation as a virtue, no doubt. Translated: inflation is seen as systemic rot; deflation as stability. There is truth to this, as deflationary crypto empowers holders, not governments (because value preservation aligns with self-reliance). And yet…
…monetary history bites back. Simply because deflation leads to low velocity (money is sitting but not moving: well, that’s the HODL frame of mind) and it thus guts crypto’s utility as a currency. History lessons? Think of the bills of exchange that became popular in the 1600s (a clever way to bridge specie’s scarcity with paper’s flexibility) or the Wörgl scrip in the 30’s Austria, two (of many) examples showcasing the opposite is what triggers growth. High utility requires circulation…!
So, although no doubt boundedness (scarcity-driven mechanics) builds a store of value, it also doesn’t quite help building a thriving L1 ecosystem. What L1s need instead? Utility and flexibility. Proof? The two examples given above: bills of exchange fueled trade, which promoted their use (and so the wheel kept moving). The Wörgl scrip flexed with demurrage, and it led to a surge in the town’s prosperity (why the Austrian central bank shut down this experiment in 1933 is still debated).
And, for a more recent example and despite all of its perceived issues, take Solana (no hard cap, ~2% inflation) hitting (top of mind) 65k TPS, 3.5 million active wallets, and about $8 billion DeFi TVL. On ICP, current DeFi volume does not even hit $35 million, from what I can quickly see on DefiLlama.
NB: Looking at the charts now, it seems the above assertion may not age too well… 
Anyway, the bottom line is: utility and flexibility (adaptable supply, scalable tech) drive L1s beyond niche stores of value. Boundedness helps trust but growth thrives on use. Flexibility, not rigidity, wins.
I’ve explored this on a paper that I’ve just uploaded on the Nebula website (see nebula-coin dot com in the “Access Documents” menu under “On Cryptocurrencies”). That’s also why we’re building Nebula on the IC.
Happy to debate.