Tokenomics 102: Digging Deeper on Supply

But it can quickly get complicated with project tokens. Here’s a simple example. For Crypto Raiders, we have released approximately 16,000,000 of our 100,000,000 total supply. But if you look on Coingecko, it says our circulating supply is only 6,723,611. Where are the rest?

Supply is obviously just one piece of the puzzle though. So in future pieces of this series we’ll also dig deeper on demand, game theory, ROI, and other aspects to good tokenomics worth knowing before investing or launching a project of your own. 

The big recent example of this is LooksRare. As Cobie explained in his post on the topic, half of the farming rewards were available to early investors whose tokens were still locked. So while retail investors might have been under the impression that they were earning most of the fees of the platform, they were actually going to the early investor... See more

The market cap is the circulating supply of tokens multiplied by the token price. The FDV is the current price multiplied by the max supply, if all tokens were in circulation.

Max supply is fairly simple. What is the maximum potential supply of this token? For Bitcoin it’s 21,000,000. Ethereum doesn’t have one. For Crypto Raiders we set it at 100,000,000. For Yearn it’s 36,666.

2% hitting the market when 30%+ is already in circulation is a relatively small increase. The token supply will double over 15 months, but that’s more than enough time for the value of the project to catch up to the token price.

The 35% of tokens allocated to the team and advisors are vested over 2 years, with a 6 month initial cliff. So 30% of tokens are initially unlocked, and then 35% come into the market over an 18 month period starting in month 6. So there’s approximately 2% of the supply hitting the market consistently per month for that period, then the inflation st... See more

You can get a decent amount of the information from public dashboards like Coingecko, but digging into the details in a project’s docs can help flush out some of these subtler details like how the emissions schedule is changing over time, who the tokens are going to, and what unlocks might be happening in the future.

So if a token has a price of $10, a circulating supply of 10,000,000, and a max supply of 100,000,000, then the Market Cap would be $100,000,000 and the FDV would be $1,000,000,000.