2.1. Terminology
Last updated
Last updated
Tracking supply of tokens necessitates domain-specific terminologies such as: "Total Issued", "Total Burnt", and "Non-circulating Supply" - which are based on on-chain stats. Meanwhile, terms regarding such as "Max supply", are mostly used as a planning concept in project's token distribution schedules.
“Max Supply” represents the maximum number of tokens that can be issued. For instance, Bitcoin has a fixed maximum supply of 21M tokens. However, the maximum supply does not impact the current circulating supply and is a projection of all potential tokens that could be issued in the future. Conversely, some tokens, like Ethereum, do not have a maximum supply as their issuance mechanism is not static and rather dynamic.
“Total Issued” refers to the overall number of tokens that have been issued on the blockchain, and it is not influenced by the maximum supply. As of May 31, 2023, Bitcoin's total supply stands at 19,388,625 tokens, while Ethereum, without a maximum supply, has a total supply of 120,251,525 tokens, and will keep changing as the issuance mechanism of Ethereum is inversely proportional to effective balance (approximately equals to amount actively staked on the Beacon Chain)
“Tokens Burnt” represents the number of tokens that are permanently removed from circulation. This includes tokens transferred to a burn address or frozen due to incorrect deposits. Xangle identifies tokens as burned if they are sent to the burn address (null address, 0x00..) on the blockchain, if it's a native burn transaction (such as EIP-1599 on Ethereum) or if there is a legal basis to back up their permanent elimination from the distributed ledger (e.g., confirmation from both the project and the exchange regarding irretrievable incorrect deposits).
“Total Supply” refers to the overall number of tokens available in the market, excluding the tokens burned. For example, if Xangle issued 1,000,000 tokens of $XNGL and 200,000 were sent to 0x000... (null address), the tokens burned would be subtracted from the total supply, resulting in a total supply of 800,000 $XNGL.
“Non-Circulating Supply” refers to tokens that have been issued but are not yet in circulation or immediately available for trading. This includes tokens locked in contracts such as staking contracts or vesting contracts, such as tokens that cannot be distributed until a specific period. Non-circulating supply is crucial when calculating the circulating supply of tokens.
Non circulating Supply play a key role in deciding a project’s circulating supply. However, the biggest problem is that currently there’s isn’t a concrete guideline from the regulation side when determining a projects’ requested supply as non-circulating or circulating.
Therefore Xangle has , a wallet-based approach and distinguishes non-circulating and circulating supply via (1) project’s request, and (2) by verifying the actual usage and managing circumstances of the requested supply.
At Last, “Circulating Supply” represents the number of tokens in circulation. While such term 'circulating' might vary, Xangle defines 'Circulating Supply' as number of tokens available for conversion into other assets such as fiat currency or other even other cryptocurrencies. Actual estimation of the circulating supply involves verifying the list of non-circulating wallets provided by the Foundation, checking the corresponding token balances, and excluding the number of non-circulating tokens from Total Supply that are confirmed to be non-circulating.