Sunday, July 14, 2024

circulating supply

by Hideo Nakamura
circulating supply

Circulating Supply Definition

Circulating supply is a term used in cryptocurrency to refer to the amount of coins or tokens that are publicly available and circulating on the market. It can be thought of as the total number of all units that have been mined, transferred, bought/sold, and otherwise made available for use by traders and investors. The total supply sometimes includes those held in reserve such as developer accounts or locked funds but these are not included when referring to circulating supply specifically.

What Influences Circulating Supply?

1) Mining: Coins must first be put into circulation before they can trade on an exchange. This process happens through mining which involves verifying transactions with computers (miners). As miners verify blocks of transactions their reward is newly minted coins released onto the network – this increases circulating supply until it reaches its maximum limit set by each individual coin’s protocol rules.

2) Buying & Selling: Circulation also occurs naturally through buying/selling operations where people transfer coins from one wallet address to another – reducing availability in one wallet while increasing availability elsewhere – thereby changing how much is considered “in-circulation” at any given time; similar principle applies when exchanging between different cryptocurrencies too. Depending upon volume traded during any particular day, this could lead to significant changes in overall circulation levels over periods measured in weeks or months rather than days alone!

3) Burns & Lockups: Some projects purposely reduce their circulating supplies either temporarily via lockup mechanisms such as vesting schedules (whereby future releases are restricted), or permanently via token burns whereby some portion gets destroyed forever so that no new ones enter into existence ever again – thus decreasing what was once considered part of ‘total’ circulation numbers down even further still!

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