Indeed, take for an example a certain p2e game last 2021 they did not manage the circulating supply of their nft coins and their token they are in the peak of their career after 3 year but then they did not expect that this 2021 they will be on the mainstream media and that incident made the project fall but it is still alive but the players decrease so bad and still they have a lot of supply.
You are right the most important is to create demand in the tokens. And sometimes it is very difficult to do this. It is simple it issue a lot of tokens but how to create demand in them. To do this it is necessary to create something useful for people that people will be glad to buy tokens and use them.
the thing with these P2E games in general is the fact that their economic aren't sustaining, the token generated steadily increase as the time goes, you could see that there are so many that farming accounts in getting more and more tokens, the developers themselves doesn't really enforce limitation thus the heavily inflated token supply to the market.
definitely it eventually gonna overwhelm the demand itself, making the token more and more valueless.
thats just how those games fail, meanwhile with total supply and circulating supply, so long it mantains good equilibrium with the demand its gonna be fine. not too much not too low.