When researching a token, you are likely to encounter different figures related to its supply. Read on to find out what this term means in the crypto world and get to know what the key metrics linked to it are.
What Is Supply?
There are three essential metrics that one must understand in the context of the crypto supply definition, namely:
- Circulating supply – number of coins or tokens of a given cryptocurrency that are currently publicly available to buy or sell.
- Total supply – the total number of tokens on the blockchain, including those that are not in public circulation.
- Maximum supply – maximum number of assets that will be ever created for a specific cryptocurrency.
Knowing what each of these metrics means and understanding the differences between them is essential to grasp how the crypto market works and what influences coin price changes.
What You Need To Know About Supply
The circulating supply fluctuates over time. Coin burning causes a decrease in the circulating supply, removing coins from the market. Mining, on the other hand, generates new coins, thus driving the circulating supply figures up.
As for the total supply, it is essentially the sum of the circulating supply and the coins that are yet to hit the open market. One example is coins that are held under a lockup or vesting period after a private sale or Initial Coin Offering (ICO) event. Note that crypto assets that are burned are excluded from the total supply.
The max supply depends on the limits set by the underlying protocol of each digital asset. Thus, it is typically defined at the genesis block according to the project’s source code. Once the maximum supply threshold is reached, there will be no new coins mined, minted, or produced in any other way for the cryptocurrency in question.
