Non-circulating Supply
Last updated
Last updated
Xangle aims to provide suitable criteria for assessing the application of circulating supply in different scenarios. The selection of non-circulating supply for calculating the circulating supply is based on two criteria: 1) the project's guidelines for calculating non-circulating supply, and 2) the project's control over tokens. If both criteria are met, the tokens are considered non-circulating and excluded from the circulating supply calculation. The following schematic, along with explanations and examples for each item, outlines this process:
The first step in calculating the non-circulating supply involves cross-referencing the project's method of determining the circulating supply. We obtain a list of tokens that are excluded from the circulating supply according to the project's calculations and verify this information by obtaining a list of wallets holding those tokens.
During this verification process, the focus is on assessing whether the tokens within these wallets are independent of the secondary market. Xangle defines as secondary markets if it enables price discovery of the tokens through frequent trading activities on platforms such as Centralized Exchanges (CEXs) and Decentralized Exchanges (DEXs). If the tokens within a wallet lack sufficient independence from the secondary market, suggesting they could easily be introduced into the secondary market at any moment, these tokens are considered part of the circulating supply.
If a wallet is identified as non-circulating, it is subtracted from the total supply, and the holdings in each wallet are tracked in real time. Any wallet that shows even the slightest possibility of becoming a circulating supply is excluded from the calculation. Xangle adopts a conservative approach to circulating supply calculations to safeguard investor interests.
After receiving information on the project's circulating supply and the associated wallet addresses holding the tokens, we conduct further verification to make a final assessment. In this stage, our main consideration is whether the project maintains control over the tokens. Control, in this context, primarily refers to whether the foundation possesses "direct" control over the wallet (i.e., holds the wallet's private key).
Indirect control over tokens will only be considered as a non-circulating supply if it passes all verification steps. Examples include contracts with legal backing and token supply forcibly locked by smart contracts.
Upon receiving assurances from the project that the token supply will not be utilized for commercial purposes and will not be released to the market at unplanned times to influence prices, the project's indirect control over the token supply can be acknowledged, and it can be included in the calculation of non-circulating supply.
other frequently asked questions regarding Non-circulating Supply can be found at the below FAQ Sheet:
