Token Circulating Supply

What is Token Circulating Supply?

Token circulating supply refers to the number of tokens or coins that are publicly available and circulating in the market. This figure differs from the total supply, which includes all tokens that have been created minus any that have been burned. Circulating supply does not include tokens that are locked, reserved, or not yet released to the public. It is a more dynamic measure than total supply and can change more frequently, providing a more accurate representation of tokens available for trading.

Understanding Circulating Supply

  • Publicly Available Tokens: Only includes tokens that are available for trading or transactional use by the general public.
  • Excludes Locked or Reserved Tokens: Tokens held in reserve, locked, or not yet released to the public are not included in the circulating supply.
  • Dynamic Measure: Circulating supply can change frequently as tokens are minted, burned, or released to the public.

Factors Affecting Circulating Supply

  1. Mining and Generation: For mineable cryptocurrencies, the circulating supply increases as new tokens are mined.
  2. Token Burns: When tokens are burned, they are permanently removed from circulation, reducing the circulating supply.
  3. Lock-up Periods: Tokens locked for a certain period (e.g., for team members or in ) are not counted in the circulating supply until they become available.

Circulating Supply vs. Total Supply

  • Total Supply: Includes all tokens that have been created minus any that have been burned. It’s a broader measure than circulating supply.
  • Circulating Supply: More dynamic and can change more frequently, providing a more accurate representation of tokens available for trading.

Importance in Market Valuation

  • Market Capitalization Calculation: Market cap is calculated as the circulating supply multiplied by the current token price.
  • Investor Consideration: Investors often consider the circulating supply to understand the potential for price appreciation or depreciation.
  • Token Distribution: Circulating supply can provide insights into the distribution of tokens among investors, team members, and other stakeholders.

Challenges in Measuring Circulating Supply

  • Accuracy: Determining the exact circulating supply can be challenging, especially for tokens with complex distribution mechanisms.
  • Transparency: Some projects may not fully disclose locked or reserved tokens, affecting the accuracy of circulating supply figures.