Topic: LOW CIRCULATION COMPARE TO TOTAL SUPPLY. (Read 389 times)

i can only say that project needs to hold back a high percentage of their token to reduce excess supply which might lead to low price. i think project owners are scared of releasing a huge quantity of tokens to the market in fear of dumping and liquidation.
Most projects that has a high percentage of their token in the market has already gain ground and a steady market. such supply is been noticed on New projects that are yet to have a huge market.  Nobody wants to loose his business.

Maybe for future giveaways like when launching into a new exchange. Marketing campaign and future bounties.  there are many projects with huge amount their total supply token Locked up. those i am not aware what there plans and intention are. Maybe a way to sell off to a new investor that might be interested in the project.

The other issue is that people just want to hoard their stash and not spend thinking their coins would rise up in value to the heavens. This further reduces the circulating supply.

Another issue is the people who invested early and then lost access to their funds like this guy: https://www.independent.co.uk/life-style/gadgets-and-tech/news/bitcoin-value-james-howells-newport-landfill-hard-drive-campbell-simpson-laszlo-hanyecz-a8091371.html

Once again it reduces the circulating supply.

Thank for the nice explanation. I didn't think that way. You are correct that projects are manipulating the circulating supply to increase the mcap which I was aware of but missed your point.

you are still correct, the "circulating" supply is used in calculation of market cap not the total supply. you didn't need to go that far either, you can look at the first in the list (bitcoin) and see the circulating supply is used instead of the 21 million cap.

BUT the problem is with fake circulating supply. take one of the biggest shitcoins called XRP for example. a huge percentage of the supply they claimed to be "circulating" is instead locked up in their own wallets. so it is unreal. a lot of others like ethereum are also like this with huge premines.

Is this really true? I used to know that Circulating Supply determines the market cap. Look at Zcash- https://coinmarketcap.com/currencies/zcash/
The maximum supply of Zcash is 21,000,000 ZEC but the circulating supply is 9,110,906 ZEC. As per current price, Circulating Supply * Current Price = $557,634,432 which is the current Market Cap of Zcash. I don't know where you get this or what I'm missing.

their calculations make perfect sense. they are setting a much higher total supply and premine it so that they can have a lot of room to play in. imagine you create 1000 garbage coin because you think you can dump that much. then by the time you want to dump you realize you can dump 1010 coins. now you are screwed. imagine another scenario where you think you can dump 1000 garbage coin but create 5000 of it. now by the time you want to dump you dump 1000 of it then dump another 10-50 garbage coin and lock 4000.
it is also 2 birds with one stone, since you also pretend you are "decreasing inflation" which could contribute to pumping the garbage coin at that time which in turn helps you dump more of it!

IMO this is an imaginary conclusion. Inflation is unavoidable, and the fact that they created that much supply to begin with means their calculation is faulty at best. The token burn thing, most of the time, is acting as a short term price fix because it creates a fake hype to the noobs, while at the same time the owner can use it to inject more tokens/coins to the market by selling them through exchanges. In short, it is a perfect time to get more money with something simple.

Sure, there might be a case like that, but I doubt most projects are genuinely thinking about their holders.

You should not even compare Litecoin and Tezos.  Me neither since I am not relay sure what Tezos is. But problem is that coinmarketcap picked all coins that have little in common and placed them on same table. Then people compare them among themself and is totally pointless. Coins that are more decentralized, will be slower. Coins that were created in ICO or are created in PoS, their real marketcap is way less as it shows. Coins that are a blockchain fork of other PoW coins also have fake marketcap since there are tons of coins calculated in their marketcap that was and will never be claimed. It is just a lot of plums and oranges wanting to be apples there.

Manipulation for the benefit of the company.

Sure, it's still important to differentiate max. supply, total supply or even infinite supply but for rough numbers CMC is giving an impression.

There are tons more, even worse shitcoins:

_____________________________________	_____________________________________	_____________________________________
BitTorrent (BTT):	Circulating Supply: 212,116,500,000	Total Supply: 990,000,000,000 BTT
HederaHashgraph (HBAR)*:	Circulating Supply: 3,302,568,095 HBAR	Total Supply: 50,000,000,000 HBAR

Dump incoming  

*only 6.6% of these shitcoins are in circulation, it's incredibly naive but people are still buying this.  

Or if we calculate the true $ price of coins out of circulation, things are looking even worse, like for "top hyped shitcoins" such as XRP.

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The problem is: people are fooled easily. Some are still thinking a coin is "cheap" when it's worth 0.10$ or 1$. They don't even bother about "Marketcap". And if they have heard about Marketcap they just check it superficial.

Simple questions.  They lock up a large portion of tokens because they believe people are dumb and will think the founders are doing a good thing, when in reality they're just trying to elevate the price during the manipulation phase so they can dump on those who supported them (see: Ripple).  Unfortunately, history has shown they're not mistaken.

They also don't, "conduct activities to get more people and also pay more" because their goal is to increase the value of their locked up tokens and the more people that have them, the more selling pressure they will have to overcome.  They are mostly looking for very few suckers who will buy the limited number of tokens that are for sale and hold them, so that they can limit selling pressure to make their manipulation attempts that much easier.

It really doesn't affect the price at all even though you increase or decrease the circulating supply, but if the coin has a high demand and you lower it's circulating supply even more the demand on that coin will be higher, and some of the remaining total supply that isn't by the circulating supply will be mined. but i think burning some circulating supply will cause the price and demand to be greater rather that decreasing the circulating supplof the token.

If it's a mineable coin then it's evident to see a max sypply greater than circulating supply since most coins haven't benn mined yet.
Take bitcoin as example: the max supply is 21M while the circulating supply is only ~18M. The remaining 3M coins haven't been mined yet.

For pre-mined coins it depends. Some projects choose to lock/burn a percentage of the total supply to avoid inflation risk.

When I check a team's telegram group, one of the things I usually notice is investors asking for team token's locked up periods. They are always wary that the team would suddenly dump their tokens and their investment would lose value. That's one reason why we see all these projects with premined tokens have lock ups.

What exactly do you mean by getting more people and pay? Are you referring to more investors?

Why projects need to burn their coins or tokens? Their teams, initially launched their projects with large amount of coins or tokens premined and hold by their teams/ companies. What are the causes of this? Waiting for chances to get fast profits after launch (it is)?

Then, if they fail to earn fast profits after the launch, they will decide to burn their coins/ tokens to boost the price and hope that they will have better prices to take profit.

For me, I don't like to invest in such projects. Invest. For trading, yeah, if I see chances, I will join and exit shortly.

The maximum supply doesn't really matter as much as the rate of entry or exit of existing supply. Bitcoin could have a cap of 210 million coins and it shouldn't affect Bitcoin's value in theory, considering how halving restricts the supply in circulation (it doesn't affect supply at all prior to year 2140); it's still going to be more and more deflationary, which translates to higher prices if there is demand for it. Supply doesn't have to adjust to demand either, that just means existing supply will be worth more.


The formula is typically:

Low Supply + High Demand = High Value

Theoretically, burning coins can artificially create a situation wherein there is more demand (even if it's low to begin with) than supply. That's an example of market manipulation though, so I wouldn't trust developers that do this.

That's one reason why many of the Bitcoin shitforks are so volatile and why there were so many of them. Some of them you couldn't move at all so they only existed on exchange balances and you had to deposit BTC before the forks.

Others like BSV probably count on people not being bothered to move their Bitcoin to claim it. That allows them to buy up the claimed coins that have been dumped so they can screw with the market to their heart's content.

Burning or locking tokens does not guarrantee the success of the platform.
I have come across few projects like that but unfortunately they failed.
Parnerships, team credibility,  exclusive modus operandi and some other important factors, without all these, then i run away from such a project regardless of how many tokens in circulation.

The token burns and lock-ups you hear of are just for stupid hype and shit so that the token creator can gain from it to dump their tokens in exchanges before they become worthless. Even if a shit project burns all the tokens and ends up with only 100 tokens in circulation. If people are not interested in the token, it will still be sold at a low price (dumped) in exchanges making it worthless.

What matters most is Demand... If there is no demand, sometimes even if your token supply is very low, it will still be worthless... Haven't you seen some projects with a deflationary model of token supply still go to zero in value?

short answer: market cap

lets say you have 100 apples and put all in circulation. now if 1 apple is worth $1 then the true market capitalization of apples is $100 (supply * price).
now lets say you have 100 apples but only put 10 of them in circulation. now if 1 apple is worth $1 you still get the same market capitalization of $100 but it is fake because the real market cap is $10

now lets say instead of apples you have garbage that 99% of people don't want. if you inject all the 100 garbage in market the price tanks to 0.00001 but if you only let a tiny portion of it be in the market you can keep the price higher while keeping the market cap up.
now you have a shitcoin that has no value and a low price with an enormous (fake) supply and (fake) market cap that is in top 10 rank.

being in top 10 rank means newbies who don't know any better fall for your shitcoin and buy it so you earn money.
additionally you own the rest of the supply that you locked away so you can make profit from dumping small portions of it each time your shitcoin pumps.
coins like ethereum and ripple are exactly doing this.

when coins burn their tokens they show that their developer had no idea about economy so he couldn't set a decent supply and had to take desperate measures to try and keep his shitcoin alive.
besides burning is not going to increase the price. it may cause some temporary hype but that's about it.

On point.thanks for the responds. XRP is centralized and control by some people. it is certain that some projects was a means to en rich some people not to serve it's purpose.

There are exchanges that engaged in reducing their total supply by burning. Are you saying they are involved in scams or they are just looking for ways to increase price.

Take a look at XRP and see for yourself what it means to have so many tokens locked up. It means someone has control over billions of dollars and I'm more than sure they're going to keep a small but significant percentage of the locked tokens to themselves.

I personally don't give a damn about those coins that are not mineable and have a high % of the total supply locked by the team. Is it decentralized or not? I mean, Satoshi didn't need to lock up coins and the percentage he supposedly owns is very small, especially knowing he probably did not expect Bitcoin to go this far.

These tokens have basically turned into moneybag-generators for their creators. So fuck tokens and ICOs. Go for the OG coins.

I can guess that 99% of projects you hear about, who locked or burn a partial of their token supply are scams or they waiting to be scams. Methods of burning and locking tooen partially are either useful to make money from nothing or a useful technique for some goals but wrongly used .
If the team behind the project has the ability to overly controle the supply, then it's nonsense talking about offer and demand to determine the real circulating supply .

Cryptocurrencies is all about adoption. what are the reasons behind altcoin projects holding BACK a large quantity of their tokens with little in circulation. Example.
Litecoin has a maximum supply of 84 million and 64 million is in circulation.  i think it okay and suitable
Tezos has a maximum supply of 694,191,974 and about 260,000,000 is in circulation. too poor if i will say.
Chainlink has one billions and only 350 millions in circulation. over 700,000,000 are stock up.

i know the theory of demand and supply. i also understand the burning process to reduce quantity in order to increase price.

Why then do projects have a large portion of their token locked up with little number in circulation. How then do we bring in people into the system.
Why not conduct activities to get more people and also pay more instead of burning to reducing the quantity. it will not achieve any meaning.