Dissecting the Unlocked Tokens vs. Circulating Supply Dynamics in the Cryptocurrency Market

In the world of cryptocurrencies, the relationship between unlocked tokens and circulating supply can often vary significantly, influencing market dynamics and investor perceptions.

In the realm of cryptocurrencies, two key concepts that influence market dynamics and investor perceptions are unlocked tokens and circulating supply. While circulating supply is a widely used metric, it can sometimes differ significantly from the percentage of tokens unlocked as stated in project whitepapers.

To gain a deeper understanding of this relationship, let's examine several notable tokens where the unlocked supply notably differs from the circulating supply:

1. $1INCH: This token demonstrates near-perfect alignment, with only a marginal 1.18% difference between unlocked and circulating supply, which aligns with typical token distribution practices.

2. $AAVE: Interestingly, its circulating supply exceeds its unlocked percentage by 1.79%, suggesting that additional factors, such as staking or token burning mechanisms, are influencing the availability of tokens.

3. $AEVO and $ALGO: These tokens exhibit larger gaps, with $AEVO at 12.57% and $ALGO at 17.24%, indicating unique liquidity dynamics or strategic token distribution strategies employed by the respective projects.

4. $FXS: Despite approximately 90% of its tokens being unlocked, it shows a significant -50% discrepancy, implying that a substantial portion of unlocked tokens are being withheld from circulation.

5. $ASTR: An outlier among the tokens examined, its circulating supply is higher than unlocked tokens, potentially due to reporting variations or distinct tokenomics strategies employed by the project.

6. $ILV and $INJ: Both tokens show discrepancies despite high unlock percentages, suggesting delayed circulation due to vesting schedules or controlled releases implemented by the projects.

7. $AXL and $BAT: These tokens show closer alignment between unlocked and circulating supply, indicating smoother distribution processes employed by the respective projects.

8. $BNB: Notably, despite 95.63% of its supply being unlocked, a 4.5% gap in circulating supply is likely influenced by its buy-back and burn mechanism, which affects the overall availability of tokens.

How much of unlocked tokens get translated into Cir. Supply? 🔎

While cir. supply is an industry standard, how does it compare to unlocked supply shown that is derived from projects whitepaper?

Let's take a look at tokens with over 90% unlocks compared to their cir. supply 👇🏻 pic.twitter.com/GXOHcGLRut

— Token Unlocks (@Tokenomist_ai) October 9, 2024

These comparisons highlight the complexities inherent in token economics within the cryptocurrency space. High unlock percentages do not necessarily equate to immediate circulation due to various factors, including vesting schedules or strategic distribution decisions. Such discrepancies—whether an oversupply or undersupply—can significantly impact liquidity and price volatility in the market, making it crucial for investors to monitor both unlocked token metrics and circulating supply dynamics closely for informed decision-making.

Disclaimer: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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The image is by peshkov/123RF with some image effects by Colorcinch