The assertion about "hidden inflation" in a Monero-based sidechain is technically flawed. Monero's Confidential Transactions (CTs) use cryptographic zero-knowledge proofs (specifically range proofs) to ensure that transaction inputs equal outputs, mathematically preventing the creation of new tokens during the transfer process. Therefore, the internal protocol prevents inflation. The actual issue is that Monero's full privacy makes it impossible to publicly audit the total supply against the external Bitcoin reserves, thus eliminating the verifiable 1:1 collateral guarantee.