What is circulating supply?

How many tokens exist, and how many have actually reached the market? These two numbers often differ quite a bit.

Think of a company that has printed tickets for a concert but has released only some of them to the public. Something similar happens with many cryptocurrencies: some tokens are already circulating, while others remain locked up for the team, for future rewards or for gradual release.

In a hypothetical project, 100 million tokens may have been created, but 60 million may still be locked and out of circulation. If the rest are available to the public, the circulating supply is 40 million. Total supply includes everything that has been created, minus whatever has been permanently destroyed. Max supply, where one is set, is the upper limit on how many can ever exist.

Why it matters

Circulating supply is used to calculate market cap (market capitalization): we multiply a coin’s price by the number of units in circulation. In the example above, at a hypothetical price of €1, the market cap would be €40 million.

That’s why we consider it misleading to compare two cryptocurrencies by price alone. A token that costs a few cents isn’t automatically “cheaper” in valuation terms than one that costs hundreds of euros. We need to know how many units are in circulation.

What to watch out for

Circulating supply is not the number of tokens being sold right now. It also includes coins that their holders keep in their wallets with no intention of selling. Coins whose private keys have been lost may also still be counted, because their loss isn’t easy to prove.

Price-tracking services may show different estimates, depending on their methodology. Token unlocks can increase the circulating supply, but that doesn’t mean all the newly available tokens will be sold. When we look at a project, we look at both today’s number and the schedule for future releases.