Circulating Supply vs Total Supply: Crypto Token Scarcity 101
If crypto supply metrics were sports stats, circulating supply is who’s currently on the field, total supply is everyone on the roster including benchwarmers, and max supply is the salary cap no one’s supposed to breach.
Simple? Not quite. Welcome to crypto tokenomics.
✅ Circulating supply is your real exposure. Total supply is what’ll sneak up and dilute you.
✅ FDV shows if you’re investing in future hype or actual current value, know the difference.
✅ Projects that hide unlock schedules or fudge supply data usually have something nastier down the road.
🤔 Low float tokens can rocket, but the crash lands hard when new supply hits the market.
🤔 Max supply doesn’t mean anything if governance can vote to change the rules whenever it wants.
What is the Difference Between Circulating and Total Supply?
At first glance, understanding circulating supply vs total supply in crypto should be a no-brainer.
But what looks like just another number on a coin listing page is actually one of the foundational components of crypto valuation, investor sentiment, token emissions, and long-term viability. It directly drives perception of scarcity, dilution risk, and trust.
Circulating supply refers to the number of tokens currently available for public trading and transactions in the market. Think of it as everything that’s in the hands of retail traders, whales, exchanges, and liquidity providers, not locked, not vesting, not stranded in a multisig wallet waiting for a governance vote.
Total supply, on the other hand, includes all tokens that have been minted so far, both those in circulation and those that are technically created but not accessible to the public. That includes anything sitting in the protocol treasury, locked up in founder vesting contracts, or awaiting allocation via governance decisions.
If you’ve wondered why a token with a $0.10 price tag shows a $10B valuation while another at $100 barely hits $1B, you aren’t alone. Supply mechanics, not just price, determine market cap, investor sentiment, and potential upside (or downside).
Let’s decode this further, with fewer buzzwords and more clarity.
Circulating Supply: The Numbers That Actually Trade
Circulating supply is the volume of coins or tokens actually available to be bought, sold, transferred, or used in protocols. It’s what investors and data aggregators use to calculate standard market cap: simply multiply the token’s price by the circulating supply.
If a coin is priced at $5 and has a circulating supply of 50 million, the market cap is $250 million. But this tells us nothing about what’s waiting in the wings.
Here’s the catch, projects control how much of their total supply is actually circulating. Many keep large portions locked up to avoid tanking the price from dilution. That’s reasonable, but it creates a minefield of perception: does this project look valuable because the market believes in the fundamentals, or because only 3% of total tokens are trading?
Look at Solana ($SOL). It had relatively low available circulation after launch while the total supply baked in years of emissions and unlocks. Tokens vested by venture capital (VC) partners often sit idle, and when they unlock, can double a token’s circulating supply almost overnight. This influx often leads to downward price pressure, investors see themselves diluted, and the same market cap now needs to support twice the available tokens.
This is the story behind many token rug pulls or slow, invisible crashes: lack of visibility into unlock schedules and poor differentiation between circulating and total supply.
Is high circulating supply good in crypto?
High circulating supply doesn’t automatically mean something is good or bad, it just changes how we view the token’s value and utility. A higher circulating supply tends to mean a lower price per token, all else being equal, but that doesn’t mean the project is cheap or expensive overall.
Think of it this way...
It’s like judging a company by its stock price. Just because a stock trades at $1 doesn’t mean it’s cheaper than one at $500, it depends on how many shares (or tokens) exist.
Some projects intentionally launch with billions or trillions of tokens (e.g., Shiba Inu or XRP) to allow for micro-denominated use or attract retail interest. Others, like Bitcoin, keep the supply low to highlight scarcity. What matters is the design, the supply dynamics over time, and the market cap, not just the raw number of tokens.
Total Supply: What’s Created, Not Necessarily Available
Where circulating supply answers “what’s live right now,” total supply answers, “what’s been created but not yet let loose.”
This includes everything currently minted minus burned tokens. Burned tokens, often removed by sending them to an inaccessible address, don’t count in circulating or total supply. But locked tokens awaiting future release do.
Sometimes, the difference between circulating and total is not millions, but billions. VeChain, Filecoin, and others have introduced tokens with massive total supplies where only a trickle is initially in circulation. This looks great on paper, high price per token, but masks how inflationary the future tokenomics might be.
You wouldn’t price a company based on outstanding shares alone, you’d also monitor insider locks, option vesting, or treasury dilution. In crypto, understanding the full token distribution schedule is just as important.
Some projects publish highly transparent unlock schedules and governance-controlled treasuries. Others don’t. Many use total supply as a mirage, to suggest more value is on the table while inflating slowly in the background.
Why is total supply often different from the amount shown on exchanges?
What you see on an exchange is the circulating supply, just the tokens available for trading. Total supply includes circulating tokens plus any that are locked, reserved, or not yet distributed. That’s why the number on your favorite exchange can look much smaller than the project’s full token count.
Think of it this way...
It’s like judging a city’s population just by who’s out walking today. The rest exist, they’re just inside buildings.
Total supply can include tokens set aside for staking rewards, team compensation, or community treasury. For example, a project may have a total supply of 1 billion, but only 250 million are live and trading. To get the full picture, look beyond exchange dashboards and check sites that break down all crypto supply types, explained through token contracts or explorer data.
Max Supply: Does Every Crypto Have One?
Some tokens come with a hard-coded cap. Bitcoin’s max supply is 21 million, full stop. It’s embedded in code, backed by global node consensus, and enforced by the halving mechanism every ~4 years. This scarcity narrative, immutable supply, predictable issuance, is part of Bitcoin’s value thesis.
But not every project plays by those rules.
Ethereum, until recently, had unlimited issuance. Its monetary policy shifted with EIP-1559, introducing a burn mechanism that in certain gas-intensive periods, actually reduces ETH’s effective supply. There’s still no max cap, but issuance is now much more dynamic and responsive. It’s an example of how “max supply” may change via community governance (or lack thereof), creating ambiguity.
Dogecoin, meanwhile, remains inflationary on purpose. Unlike Bitcoin’s gold-like scarcity model, Dogecoin issues a predictable number of tokens per year. Depending on network usage and burn mechanics, this “forever-print” model could be either sustainable, or a red flag for dilution.
In many DeFi tokens, max supply exists only in theory. Just because a whitepaper declares 1 billion tokens doesn’t mean the smart contract enforces it. DAOs can, and often do, propose updates to the emissions schedule. If stakeholders vote yes, the cap lifts. Projects that lack strong tokenholder activism or mature governance mechanisms are more fragile to this.
Why do some tokens have a max supply while others don’t?
Some projects set a max supply to enforce scarcity and limit inflation. Others keep it open-ended to maintain flexibility, incentivize participation, or meet future utility needs. The choice depends on the project’s economic design and priorities.
Think of it this way...
If max supply is a finish line, then no max supply is a treadmill, you keep going, forever fueling the system.
Bitcoin famously caps out at 21 million to maintain digital scarcity. Ethereum, on the other hand, doesn’t enforce a strict max; instead, it burns base transaction fees to balance out new issuance over time. Stablecoins like USDC or DAI mint and burn as needed to track demand, so max supply would be arbitrary for them. A fixed cap can make a token feel scarce, but no cap can offer long-term adaptability if managed well.
What happens if circulating supply reaches max supply?
When circulating supply hits max supply, no new tokens will ever be added. At that point, the supply becomes fully fixed, and price movements depend entirely on demand. No further inflation is possible under the protocol’s current rules.
Think of it this way...
It’s like a sold-out collectible, once every copy is in the wild, the only way to get one is from someone who already has it.
Bitcoin will eventually reach its 21 million cap; once all coins are mined, miners won’t earn block rewards, they’ll rely solely on transaction fees. Some tokens, like BNB, manually burn supply to reduce circulating and approach a capped max. Others, like Ethereum (which has no fixed max), use mechanisms like EIP-1559 to slowly control and reduce total supply without a hard cap. The key impact of hitting max supply? It locks in scarcity, but it also shifts incentives across the network.
How does max supply influence scarcity and investor perception?
A max supply creates a psychological and economic sense of scarcity. When people know there’s a hard cap, they often value each individual token more. This can affect long-term demand, especially among holders who believe supply limitations create upward pressure when demand rises.
Think of it this way...
It’s like owning a rare comic book. If no more will ever be printed, scarcity drives interest, even sentimentally.
Bitcoin’s fixed 21 million token limit is central to its narrative as “digital gold.” Tokens with no cap or unclear limits, like some meme coins, may feel more inflation-prone or experimental. Investor perception isn’t always rational, but clear limits often signal maturity and planning. That doesn’t mean capped tokens are “better”, just that max supply helps shape the story people tell about a project.
Can developers change a coin’s total supply after launch?
Yes, but it depends on how the token is designed. If the token’s supply rules are governed by immutable smart contracts or protocol code, developers can’t change the total supply without a community-approved upgrade. But in many projects, especially early-stage ones, dev teams or DAOs have the authority to modify supply through code updates, governance, or hidden functions.
Think of it this way...
Changing total supply is like altering the number of puzzle pieces after people have started solving it, it changes the whole picture.
Some projects can mint new tokens to raise funds, reward users, or adjust inflation, like governance tokens managed by DAOs. Others have hardcoded limits and cannot expand without major forks or consensus changes. Always check the token’s documentation and smart contract permissions before assuming the supply is set in stone.
What does 100% circulating supply mean?
A cryptocurrency with 100% circulating supply means that all of its created tokens are now publicly available. None are locked in smart contracts, reserved for future use, or controlled by the project. What you see in wallets and on exchanges is everything that currently exists.
Think of it this way...
It’s like a restaurant already serving every dish it can ever make, there’s nothing left in the kitchen waiting to be cooked or delivered.
This can happen in two cases: either the project minted everything up-front (like Dogecoin, which keeps printing on schedule), or the token fully unlocked over time through vesting, mining, or rewards. Just keep in mind: 100% circulating supply doesn’t always mean max supply has been reached, especially if the project allows inflation or has no real cap. It’s one supply milestone, not the story’s end.
How Supply Affects Price, Value, and Sentiment
Let’s break down why all this matters, because it absolutely does.
Think of two tokens.
One has 990M total supply but only 10M in circulation.
The other has 950M circulating out of 1B total.
On a per-token basis, the first might seem more expensive, lower supply equals higher price, right? Wrong. It’s an illusion.
Token #1 has a dilution time bomb. Once vesting occurs or emissions pick up, the circulating supply may skyrocket, pressuring price downward unless demand grows exponentially. Investors who’ve done their homework may anticipate this and price it in, but many don’t.
Token #2 is more transparent. What you see is closer to the final picture. Fewer surprises after launch. In the crypto world where trust is everything and time horizons are short, that kind of clarity matters.
Now enter FDV, Fully Diluted Valuation. That’s price times max supply. It tells you what a token would be worth if every possible coin were released today at today’s price. FDV is often absurdly high in low-circulation coins, hinting at how much slack the market is giving the team.
A $0.50 token with only 1% of supply circulating may look cheap, until you realize that its FDV is $50 billion. Yikes.
Perception is tied to reality. Supply data feeds that perception. Misunderstand it, and you buy the mirage.
What Can Go Wrong When You Misread Supply?
Mistakes in understanding supply aren’t just academic, they’re devastating.
Tokens often use vesting cliffs to delay large unlocks.
Cliff hits -> huge increase in circulating supply -> price slide.
For example, Telegram’s token (TON) experienced exactly this with unlocks flooding an already thin market.
Some DAOs vote to change emission rates mid-stream. You might have bought a “scarce” token, only to watch it inflate as protocol usage grows or validator incentives shift.
Other times, circulating supply is under-reported. Aggregators may lag updates, or rely on self-reported figures. If a whale quietly moves locked liquidity to a DEX, that supply just entered circulation.
Before investing in any token, smart users check:
- Is the circulating supply a large portion of total supply?
- Is the allocation fair, or is it mostly team/VC tokens unlocking soon?
- Does the protocol enforce max supply in code, or just in a PDF?
Does inflation in tokenomics relate more to total or circulating supply?
Inflation in crypto relates more directly to circulating supply, it’s about how quickly new tokens are entering the market. Total supply shows how many tokens exist in theory; circulating tracks how many are available right now.
Think of it this way...
Imagine printing money. Inflation doesn’t come from how much you could print, it comes from how much actually shows up in people’s wallets.
If a project is minting new tokens or unlocking them from reserves, that’s injecting liquidity and increasing supply on-chain, which can dilute value. Inflation stats often quote a “circulating annual inflation rate”, how much more supply is released relative to what’s already circulating. This affects yield strategies, price stability, and perception of long-term sustainability.
How does staking impact the visibility of circulating supply on-chain?
Staking temporarily locks tokens, making them unavailable for trading, but they often still count in circulating supply. This creates a gray area: technically active, but not currently liquid.
Think of it this way...
It's like money in a fixed-term deposit. It exists in your account, but you can’t withdraw it until the term ends.
Protocols like Ethereum or Solana may have large amounts of tokens staked for security or governance. While these tokens still belong to users and often count toward circulated totals, their temporary lock-up reduces sell pressure. Some tracking sites list “liquid circulating supply” to account for these nuances.
How do vesting schedules affect circulating supply over time?
Vesting schedules delay the release of tokens to founders, teams, or investors, gradually increasing the circulating supply over time. This protects against sudden sell-offs and encourages long-term alignment with the project.
Think of it this way...
It's like giving an employee stock options that unlock monthly instead of all at once, they earn access over time, not up front.
In real terms, tokens under vesting stay excluded from circulating supply, even if they’re technically minted. For example, a project may mint 1 billion tokens at launch but start with a circulating supply of 100 million. As vested tokens unlock from the treasury or investor wallets, they gradually enter circulation, affecting supply metrics and potentially price. Tracking vesting schedules helps decode future supply pressure and release timelines.
What’s the difference between unlocked tokens and circulating tokens?
Unlocked tokens are no longer under lockup, technically, they can be transferred or sold. Circulating tokens are unlocked and actively in public hands. Not all unlocked tokens are immediately circulating, some may still be held by insiders, treasuries, or waiting to be used.
Think of unlocked tokens as food taken out of the freezer. It’s thawed and ready, but not necessarily on someone’s plate yet.
The difference matters because it shows future supply pressure. Tokens might be unlocked on chain but not yet moving onto exchanges or entering the broader market. For example, a protocol might unlock a tranche of tokens monthly for team members, but those team members could delay selling or hold for governance reasons. Circulating supply only counts what’s active, not just eligible.
Final Thoughts: Understand Circulating vs Total vs Max Supply
The difference between circulating supply, total supply, and max supply isn’t just about semantics, it’s the difference between having the full picture versus betting blind.
In a market that never sleeps and where narratives move fast, supply signals keep you anchored. Unlock schedules show you when volatility might hit. FDV tells you how optimistic investors already are. Max supply, or its absence, tells you whether you’re dealing with a deflationary collectible or a yield-inflated incentive token.
As a DeFi-aware exchange, we see projects come and go based on how well, or poorly, they manage perception, transparency, and token distribution. Genuine scarcity builds long-term confidence. Obscured supply does the opposite.
Want to go deeper? Start reading tokenomics whitepapers, follow DAO governance proposals, and dig through explorer data. This stuff isn’t just about “getting in early.” It’s about knowing what you’re buying, why it might grow, and what dilution event could change the game tomorrow.
If crypto supply metrics were sports stats, circulating supply is who’s currently on the field, total supply is everyone on the roster including benchwarmers, and max supply is the salary cap no one’s supposed to breach.
Simple? Not quite. Welcome to crypto tokenomics.
✅ Circulating supply is your real exposure. Total supply is what’ll sneak up and dilute you.
✅ FDV shows if you’re investing in future hype or actual current value, know the difference.
✅ Projects that hide unlock schedules or fudge supply data usually have something nastier down the road.
🤔 Low float tokens can rocket, but the crash lands hard when new supply hits the market.
🤔 Max supply doesn’t mean anything if governance can vote to change the rules whenever it wants.
What is the Difference Between Circulating and Total Supply?
At first glance, understanding circulating supply vs total supply in crypto should be a no-brainer.
But what looks like just another number on a coin listing page is actually one of the foundational components of crypto valuation, investor sentiment, token emissions, and long-term viability. It directly drives perception of scarcity, dilution risk, and trust.
Circulating supply refers to the number of tokens currently available for public trading and transactions in the market. Think of it as everything that’s in the hands of retail traders, whales, exchanges, and liquidity providers, not locked, not vesting, not stranded in a multisig wallet waiting for a governance vote.
Total supply, on the other hand, includes all tokens that have been minted so far, both those in circulation and those that are technically created but not accessible to the public. That includes anything sitting in the protocol treasury, locked up in founder vesting contracts, or awaiting allocation via governance decisions.
If you’ve wondered why a token with a $0.10 price tag shows a $10B valuation while another at $100 barely hits $1B, you aren’t alone. Supply mechanics, not just price, determine market cap, investor sentiment, and potential upside (or downside).
Let’s decode this further, with fewer buzzwords and more clarity.
Circulating Supply: The Numbers That Actually Trade
Circulating supply is the volume of coins or tokens actually available to be bought, sold, transferred, or used in protocols. It’s what investors and data aggregators use to calculate standard market cap: simply multiply the token’s price by the circulating supply.
If a coin is priced at $5 and has a circulating supply of 50 million, the market cap is $250 million. But this tells us nothing about what’s waiting in the wings.
Here’s the catch, projects control how much of their total supply is actually circulating. Many keep large portions locked up to avoid tanking the price from dilution. That’s reasonable, but it creates a minefield of perception: does this project look valuable because the market believes in the fundamentals, or because only 3% of total tokens are trading?
Look at Solana ($SOL). It had relatively low available circulation after launch while the total supply baked in years of emissions and unlocks. Tokens vested by venture capital (VC) partners often sit idle, and when they unlock, can double a token’s circulating supply almost overnight. This influx often leads to downward price pressure, investors see themselves diluted, and the same market cap now needs to support twice the available tokens.
This is the story behind many token rug pulls or slow, invisible crashes: lack of visibility into unlock schedules and poor differentiation between circulating and total supply.
Is high circulating supply good in crypto?
High circulating supply doesn’t automatically mean something is good or bad, it just changes how we view the token’s value and utility. A higher circulating supply tends to mean a lower price per token, all else being equal, but that doesn’t mean the project is cheap or expensive overall.
Think of it this way...
It’s like judging a company by its stock price. Just because a stock trades at $1 doesn’t mean it’s cheaper than one at $500, it depends on how many shares (or tokens) exist.
Some projects intentionally launch with billions or trillions of tokens (e.g., Shiba Inu or XRP) to allow for micro-denominated use or attract retail interest. Others, like Bitcoin, keep the supply low to highlight scarcity. What matters is the design, the supply dynamics over time, and the market cap, not just the raw number of tokens.
Total Supply: What’s Created, Not Necessarily Available
Where circulating supply answers “what’s live right now,” total supply answers, “what’s been created but not yet let loose.”
This includes everything currently minted minus burned tokens. Burned tokens, often removed by sending them to an inaccessible address, don’t count in circulating or total supply. But locked tokens awaiting future release do.
Sometimes, the difference between circulating and total is not millions, but billions. VeChain, Filecoin, and others have introduced tokens with massive total supplies where only a trickle is initially in circulation. This looks great on paper, high price per token, but masks how inflationary the future tokenomics might be.
You wouldn’t price a company based on outstanding shares alone, you’d also monitor insider locks, option vesting, or treasury dilution. In crypto, understanding the full token distribution schedule is just as important.
Some projects publish highly transparent unlock schedules and governance-controlled treasuries. Others don’t. Many use total supply as a mirage, to suggest more value is on the table while inflating slowly in the background.
Why is total supply often different from the amount shown on exchanges?
What you see on an exchange is the circulating supply, just the tokens available for trading. Total supply includes circulating tokens plus any that are locked, reserved, or not yet distributed. That’s why the number on your favorite exchange can look much smaller than the project’s full token count.
Think of it this way...
It’s like judging a city’s population just by who’s out walking today. The rest exist, they’re just inside buildings.
Total supply can include tokens set aside for staking rewards, team compensation, or community treasury. For example, a project may have a total supply of 1 billion, but only 250 million are live and trading. To get the full picture, look beyond exchange dashboards and check sites that break down all crypto supply types, explained through token contracts or explorer data.
Max Supply: Does Every Crypto Have One?
Some tokens come with a hard-coded cap. Bitcoin’s max supply is 21 million, full stop. It’s embedded in code, backed by global node consensus, and enforced by the halving mechanism every ~4 years. This scarcity narrative, immutable supply, predictable issuance, is part of Bitcoin’s value thesis.
But not every project plays by those rules.
Ethereum, until recently, had unlimited issuance. Its monetary policy shifted with EIP-1559, introducing a burn mechanism that in certain gas-intensive periods, actually reduces ETH’s effective supply. There’s still no max cap, but issuance is now much more dynamic and responsive. It’s an example of how “max supply” may change via community governance (or lack thereof), creating ambiguity.
Dogecoin, meanwhile, remains inflationary on purpose. Unlike Bitcoin’s gold-like scarcity model, Dogecoin issues a predictable number of tokens per year. Depending on network usage and burn mechanics, this “forever-print” model could be either sustainable, or a red flag for dilution.
In many DeFi tokens, max supply exists only in theory. Just because a whitepaper declares 1 billion tokens doesn’t mean the smart contract enforces it. DAOs can, and often do, propose updates to the emissions schedule. If stakeholders vote yes, the cap lifts. Projects that lack strong tokenholder activism or mature governance mechanisms are more fragile to this.
Why do some tokens have a max supply while others don’t?
Some projects set a max supply to enforce scarcity and limit inflation. Others keep it open-ended to maintain flexibility, incentivize participation, or meet future utility needs. The choice depends on the project’s economic design and priorities.
Think of it this way...
If max supply is a finish line, then no max supply is a treadmill, you keep going, forever fueling the system.
Bitcoin famously caps out at 21 million to maintain digital scarcity. Ethereum, on the other hand, doesn’t enforce a strict max; instead, it burns base transaction fees to balance out new issuance over time. Stablecoins like USDC or DAI mint and burn as needed to track demand, so max supply would be arbitrary for them. A fixed cap can make a token feel scarce, but no cap can offer long-term adaptability if managed well.
What happens if circulating supply reaches max supply?
When circulating supply hits max supply, no new tokens will ever be added. At that point, the supply becomes fully fixed, and price movements depend entirely on demand. No further inflation is possible under the protocol’s current rules.
Think of it this way...
It’s like a sold-out collectible, once every copy is in the wild, the only way to get one is from someone who already has it.
Bitcoin will eventually reach its 21 million cap; once all coins are mined, miners won’t earn block rewards, they’ll rely solely on transaction fees. Some tokens, like BNB, manually burn supply to reduce circulating and approach a capped max. Others, like Ethereum (which has no fixed max), use mechanisms like EIP-1559 to slowly control and reduce total supply without a hard cap. The key impact of hitting max supply? It locks in scarcity, but it also shifts incentives across the network.
How does max supply influence scarcity and investor perception?
A max supply creates a psychological and economic sense of scarcity. When people know there’s a hard cap, they often value each individual token more. This can affect long-term demand, especially among holders who believe supply limitations create upward pressure when demand rises.
Think of it this way...
It’s like owning a rare comic book. If no more will ever be printed, scarcity drives interest, even sentimentally.
Bitcoin’s fixed 21 million token limit is central to its narrative as “digital gold.” Tokens with no cap or unclear limits, like some meme coins, may feel more inflation-prone or experimental. Investor perception isn’t always rational, but clear limits often signal maturity and planning. That doesn’t mean capped tokens are “better”, just that max supply helps shape the story people tell about a project.
Can developers change a coin’s total supply after launch?
Yes, but it depends on how the token is designed. If the token’s supply rules are governed by immutable smart contracts or protocol code, developers can’t change the total supply without a community-approved upgrade. But in many projects, especially early-stage ones, dev teams or DAOs have the authority to modify supply through code updates, governance, or hidden functions.
Think of it this way...
Changing total supply is like altering the number of puzzle pieces after people have started solving it, it changes the whole picture.
Some projects can mint new tokens to raise funds, reward users, or adjust inflation, like governance tokens managed by DAOs. Others have hardcoded limits and cannot expand without major forks or consensus changes. Always check the token’s documentation and smart contract permissions before assuming the supply is set in stone.
What does 100% circulating supply mean?
A cryptocurrency with 100% circulating supply means that all of its created tokens are now publicly available. None are locked in smart contracts, reserved for future use, or controlled by the project. What you see in wallets and on exchanges is everything that currently exists.
Think of it this way...
It’s like a restaurant already serving every dish it can ever make, there’s nothing left in the kitchen waiting to be cooked or delivered.
This can happen in two cases: either the project minted everything up-front (like Dogecoin, which keeps printing on schedule), or the token fully unlocked over time through vesting, mining, or rewards. Just keep in mind: 100% circulating supply doesn’t always mean max supply has been reached, especially if the project allows inflation or has no real cap. It’s one supply milestone, not the story’s end.
How Supply Affects Price, Value, and Sentiment
Let’s break down why all this matters, because it absolutely does.
Think of two tokens.
One has 990M total supply but only 10M in circulation.
The other has 950M circulating out of 1B total.
On a per-token basis, the first might seem more expensive, lower supply equals higher price, right? Wrong. It’s an illusion.
Token #1 has a dilution time bomb. Once vesting occurs or emissions pick up, the circulating supply may skyrocket, pressuring price downward unless demand grows exponentially. Investors who’ve done their homework may anticipate this and price it in, but many don’t.
Token #2 is more transparent. What you see is closer to the final picture. Fewer surprises after launch. In the crypto world where trust is everything and time horizons are short, that kind of clarity matters.
Now enter FDV, Fully Diluted Valuation. That’s price times max supply. It tells you what a token would be worth if every possible coin were released today at today’s price. FDV is often absurdly high in low-circulation coins, hinting at how much slack the market is giving the team.
A $0.50 token with only 1% of supply circulating may look cheap, until you realize that its FDV is $50 billion. Yikes.
Perception is tied to reality. Supply data feeds that perception. Misunderstand it, and you buy the mirage.
What Can Go Wrong When You Misread Supply?
Mistakes in understanding supply aren’t just academic, they’re devastating.
Tokens often use vesting cliffs to delay large unlocks.
Cliff hits -> huge increase in circulating supply -> price slide.
For example, Telegram’s token (TON) experienced exactly this with unlocks flooding an already thin market.
Some DAOs vote to change emission rates mid-stream. You might have bought a “scarce” token, only to watch it inflate as protocol usage grows or validator incentives shift.
Other times, circulating supply is under-reported. Aggregators may lag updates, or rely on self-reported figures. If a whale quietly moves locked liquidity to a DEX, that supply just entered circulation.
Before investing in any token, smart users check:
- Is the circulating supply a large portion of total supply?
- Is the allocation fair, or is it mostly team/VC tokens unlocking soon?
- Does the protocol enforce max supply in code, or just in a PDF?
Does inflation in tokenomics relate more to total or circulating supply?
Inflation in crypto relates more directly to circulating supply, it’s about how quickly new tokens are entering the market. Total supply shows how many tokens exist in theory; circulating tracks how many are available right now.
Think of it this way...
Imagine printing money. Inflation doesn’t come from how much you could print, it comes from how much actually shows up in people’s wallets.
If a project is minting new tokens or unlocking them from reserves, that’s injecting liquidity and increasing supply on-chain, which can dilute value. Inflation stats often quote a “circulating annual inflation rate”, how much more supply is released relative to what’s already circulating. This affects yield strategies, price stability, and perception of long-term sustainability.
How does staking impact the visibility of circulating supply on-chain?
Staking temporarily locks tokens, making them unavailable for trading, but they often still count in circulating supply. This creates a gray area: technically active, but not currently liquid.
Think of it this way...
It's like money in a fixed-term deposit. It exists in your account, but you can’t withdraw it until the term ends.
Protocols like Ethereum or Solana may have large amounts of tokens staked for security or governance. While these tokens still belong to users and often count toward circulated totals, their temporary lock-up reduces sell pressure. Some tracking sites list “liquid circulating supply” to account for these nuances.
How do vesting schedules affect circulating supply over time?
Vesting schedules delay the release of tokens to founders, teams, or investors, gradually increasing the circulating supply over time. This protects against sudden sell-offs and encourages long-term alignment with the project.
Think of it this way...
It's like giving an employee stock options that unlock monthly instead of all at once, they earn access over time, not up front.
In real terms, tokens under vesting stay excluded from circulating supply, even if they’re technically minted. For example, a project may mint 1 billion tokens at launch but start with a circulating supply of 100 million. As vested tokens unlock from the treasury or investor wallets, they gradually enter circulation, affecting supply metrics and potentially price. Tracking vesting schedules helps decode future supply pressure and release timelines.
What’s the difference between unlocked tokens and circulating tokens?
Unlocked tokens are no longer under lockup, technically, they can be transferred or sold. Circulating tokens are unlocked and actively in public hands. Not all unlocked tokens are immediately circulating, some may still be held by insiders, treasuries, or waiting to be used.
Think of unlocked tokens as food taken out of the freezer. It’s thawed and ready, but not necessarily on someone’s plate yet.
The difference matters because it shows future supply pressure. Tokens might be unlocked on chain but not yet moving onto exchanges or entering the broader market. For example, a protocol might unlock a tranche of tokens monthly for team members, but those team members could delay selling or hold for governance reasons. Circulating supply only counts what’s active, not just eligible.
Final Thoughts: Understand Circulating vs Total vs Max Supply
The difference between circulating supply, total supply, and max supply isn’t just about semantics, it’s the difference between having the full picture versus betting blind.
In a market that never sleeps and where narratives move fast, supply signals keep you anchored. Unlock schedules show you when volatility might hit. FDV tells you how optimistic investors already are. Max supply, or its absence, tells you whether you’re dealing with a deflationary collectible or a yield-inflated incentive token.
As a DeFi-aware exchange, we see projects come and go based on how well, or poorly, they manage perception, transparency, and token distribution. Genuine scarcity builds long-term confidence. Obscured supply does the opposite.
Want to go deeper? Start reading tokenomics whitepapers, follow DAO governance proposals, and dig through explorer data. This stuff isn’t just about “getting in early.” It’s about knowing what you’re buying, why it might grow, and what dilution event could change the game tomorrow.