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Understanding supply and demand in the crypto sector: Max Supply VS Total Supply VS Circulating Supply

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Understanding supply and demand in the crypto sector: Max Supply VS Total Supply VS Circulating Supply

 

 

Max Supply 

 

In terms of cryptocurrencies, a maximum supply refers to the number of coins or tokens that will ever be released. Once the max supply defined at the first-ever (Genesis) block has been reached, there will be no additional coins minted or made in any other way.

 

Usually the maximum amount of the supply is normally limited by the protocols of the respective currencies. Accordingly, a project's source code usually determines the maximum supply at the genesis block which is the first block of the currency.


 

Some cryptocurrencies do not have a predefined maximum supply, meaning they can be mined or minted continuously. Ethereum is a notable example of a cryptocurrency system that has no predetermined maximum supply. Ether’s supply is constantly increasing as new blocks are generated.



 

Total Supply

 

Total supply refers to the number of coins or tokens that are either in existence or locked in some way at the moment. It’s the total number of coins mined (or issued) minus the number of coins burned.

 

Total supply counts both the circulating supply and the coins yet to come to market.Normally, these coins follow a private sale or Initial Coin Offering (ICO), where they are under lockup or vesting.The total supply does not include burned coins or tokens. Binance burns its BNB coin at the end of each quarter, reducing the total supply of BNB forever.


 

Circulating Supply

 

Tokens distributed by the circulating supply are those coins that are traded on the market. All tokens held by users or on crypto exchanges/reservoirs in decentralized apps form the circulating supply. Tokens that will ever be circulated are different from tokens that will ever be created, which is known as the total supply.