Circulating Supply

Circulating supply is the total number of cryptocurrency tokens or coins that have been minted, are not locked, and are available for public trading on the open market. It excludes tokens that are locked in vesting schedules, held by the project's foundation, or otherwise restricted from sale. This figure is dynamic, increasing as more tokens are mined, staked as rewards, or released from lock-ups, and decreasing if tokens are permanently removed from circulation through mechanisms like token burns. It is a fundamental input for calculating a cryptocurrency's market capitalization, which is the product of circulating supply and current price.

Accurately determining circulating supply requires analyzing a blockchain's tokenomics. Key exclusions typically include: - Team and advisor allocations subject to multi-year vesting periods. - Foundation or treasury reserves earmarked for future development. - Tokens locked in smart contracts for staking, governance, or decentralized finance (DeFi) protocols, unless they are liquid and tradable. - Pre-mined tokens that have not yet been distributed. Projects like Ethereum (ETH) have a circulating supply that grows with each new block validated, while Bitcoin's (BTC) circulating supply increases at a predictable rate until it reaches its hard cap of 21 million coins.

This metric is crucial for investors and analysts as it provides context for a token's price, scarcity, and potential dilution. A low circulating supply relative to the total supply can indicate future selling pressure as locked tokens are released. Comparing the circulating supply to the fully diluted valuation (FDV), which uses the total supply, reveals the potential market cap inflation. For example, a token with a high FDV relative to its current market cap suggests significant inflation ahead, which is a critical risk assessment factor. Reliable data sources like CoinMarketCap and CoinGecko have established rigorous methodologies to audit and report this figure, though discrepancies can occur between trackers.

Circulating supply is the number of cryptocurrency coins or tokens that are publicly available and circulating in the market, determined by subtracting locked, reserved, or otherwise non-tradable tokens from the total supply. This metric is a critical input for calculating market capitalization and is used by analysts to assess a network's economic activity and valuation. The calculation is not standardized, leading to different methodologies and potential discrepancies between data providers like CoinMarketCap and CoinGecko.

The primary step in determining circulating supply is identifying and excluding non-circulating assets. These typically include tokens held by the project's foundation or team that are subject to a vesting schedule, tokens allocated for future ecosystem development (e.g., grants, staking rewards), and tokens that are burned or permanently removed from circulation. For proof-of-stake networks, tokens that are actively staked or delegated are generally considered part of the circulating supply, as they remain liquid and can typically be unstaked (subject to an unbonding period).

Data aggregation platforms employ specific, often proprietary, methodologies to track these allocations. They analyze a project's official documentation (tokenomics papers, whitepapers, blog announcements), monitor foundational wallets and smart contract vesting schedules, and track on-chain activity to verify lock-ups. For example, a platform may exclude tokens held in a known team vesting contract but include tokens in a staking contract if the unbonding period is less than a certain threshold, such as 30 days.

Discrepancies arise due to interpretation differences. Key debates include whether staked tokens should be counted, how to treat tokens in decentralized finance (DeFi) liquidity pools or lending protocols, and the classification of tokens held by partnerships or ecosystem funds that may have transfer restrictions. These variations mean a token's reported market cap can differ significantly depending on the source, highlighting the importance of reviewing the methodology notes provided by data aggregators.

For accurate analysis, developers and investors should consult the project's primary sources to understand vesting schedules and lock-ups, and cross-reference data from multiple aggregators. Understanding what is excluded from circulation provides crucial insight into potential future sell pressure from unlocking events and the true level of liquid tokens available for trading, which directly impacts price discovery and liquidity metrics on exchanges.

Circulating supply is the number of cryptocurrency tokens or coins that are publicly available and circulating in the market. This figure excludes tokens that are locked, reserved for the team, held by the foundation, or otherwise not available for public trading. It is the definitive metric for calculating a token's market capitalization, which is the product of circulating supply and the current market price. Understanding this distinction is critical, as a project's total supply or max supply can be significantly larger, creating a misleading picture of its true market size and potential for dilution.

For developers and analysts, circulating supply is a primary input for valuation models and on-chain analytics. It directly influences key ratios like the fully diluted valuation (FDV), which projects a token's market cap if the entire max supply were in circulation. A large gap between market cap and FDV often signals significant future inflationary pressure from token unlocks. Furthermore, protocols that use token supply in their mechanisms—such as proof-of-stake networks for staking rewards or decentralized autonomous organizations (DAOs) for governance voting power—rely on an accurate circulating supply to assess network security and decentralization.

From a market and liquidity perspective, circulating supply determines a token's float—the shares readily available for trading—which impacts price volatility and slippage. A token with a small circulating supply relative to its total supply is more susceptible to sharp price movements when locked tokens are released. For CTOs evaluating integration or treasury management, analyzing the token release schedule (vesting) and the entities holding non-circulating tokens is essential for risk assessment. Real-world examples, like the scheduled unlocks for major projects such as Avalanche (AVAX) or Aptos (APT), demonstrate how anticipated changes in circulating supply are factored into market prices months in advance.