Beyond Market Cap: ‘Unlocked Supply’ Offers Deeper Insights

Circulating supply, a common metric for valuing crypto tokens, often hides crucial details. Token Unlocks is tackling this issue by introducing unlocked supply, a more accurate way to estimate future token availability.

The problem with circulating supply lies in its reliance on self-reported data and infrequent updates. This can lead to significant discrepancies, making it difficult for investors to get a true picture of a token’s value.

Circulating Supply is often misunderstood as a simple and straight forward metric

While it’s undoubtedly the most popular metric for assessing a token, it has numerous shortcomings that many overlook.

👇 Unveiling the hidden facts about cir. supply: pic.twitter.com/MiqtTuSFrY

— Token Unlocks (@Token_Unlocks) August 22, 2024

Due to the lack of universal reporting standards, the accuracy of circulating supply can vary significantly. Additionally, methods for tracking circulating supply, like wallet movements and estimations, can be outdated. Sometimes they’re only updated monthly, causing big differences in the reported numbers.

To tackle these issues is why Token Unlocks introduced a new metric: unlocked supply. Unlike circulating supply, which can lag behind, unlocked supply uses vesting schedules for a more accurate estimate of future token supply. This gives investors a heads-up about possible market shifts and also this approach offers a more structured and accurate way to estimate future token supply, giving investors a leading indicator of potential market changes.

One of the key benefits of unlocked supply is its ability to serve as an early warning system. By providing granular data that is either updated daily or weekly, it allows users to anticipate token releases that have not yet been reflected in circulating supply metrics. Moreover, comparing unlocked supply with circulating supply can act as a verification tool, helping to ensure the accuracy of the data presented by project teams.

However, unlocked supply is not without its challenges. The metric can be influenced by dynamic factors such as token burns, incentive programs, DAO decisions, and ecosystem grants. These elements, often introduced after a project’s whitepaper or Token Generation Event (TGE), can alter the expected supply.

To truly understand a project’s tokenomics, you need to look at both circulating supply and unlocked supply. Together, they give a clearer picture of supply dynamics, helping everyone make smarter decisions in the ever-changing crypto world.

Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.

Source