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Total vs. Circulating supply

Posted on October 16th, 2018 in Blog by Alexander Harutunian

Blockchain based tokens introduced a fresh economic concept above the circulating supply of the tokens – the total supply. The reason is easy: in an immutable world of blockchain, if you ever plan to add coins to circulation, you must define it in the beginning.

Here comes the next question. What should be the total supply and which part should be circulated. Defining a right circulating supply is a complex topic, the same as monetary policy that Central banks govern.

Defining a right total supply is a burden too. If a project wants to issue payment tokens, it is normal to expect that it would grow indefinitely and have total supply also unlimited. But they don’t issue tokens with open total supply – it would diminish the value to investors who invest in them. Even Bitcoin that was not introduced by ICO (all coins were mined) has limited supply and that attracts some hodlers. There are exchanges that do not list tokens with unlimited supply, claiming them too risky. So, we need to put a finite number in the total supply box.

At this point the average number of some 50 top coins on Coinmarketcap list is 252 mln. with the maximum of 10 trillion (KIN) and minimum of 1mln of (Mixer, Maker).

Average portion of circulating coins is 48%. A simple analysis reveals a correlation of circulating supply percentage with price – the higher the percentage, the higher the price. Traders and investors do not expect surprises from that group, at least in terms of supply manipulation.

 

Percentage of circulating supply

Average of Total supply

Average of Price

Average of Circulating Supply

High (>50%)

11,823,073,737

23.50

8,643,977,060

Mid (40-50%)

25,190,748,663

11.12

10,365,135,414

Bottom (<40)

613,898,347,000

0.25

58,688,192,118

Gross Averages

242,300,153,724

11.69

27,950,757,433

 

There is also an inverse correlation between the total supply and percentage of circulating supply. Larger tokens bases have also put a smaller portion in circulation. Looks like they have planned to live in the 30th century.

Look our Token volume research form Coinmarketcap. Download


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