Topic: Need to better understand what market cap means - page 2. (Read 263 times)

Hello everyone,

I need clarification on the concept of market cap, please. I am referring to market cap and not fully diluted market cap.
And my question concerns tokens that use existing blockchains (such as play-to-earn on BSC).

So, if I understand correctly, the formula for market cap is token price x number of tokens in circulation.

Hence my first question: What is meant by tokens in circulation?

I understand that this refers to ALL tokens in circulation, meaning all tokens that are not locked, burnt, etc.

Generally, among the major categories that appear in a project's tokenomics: we see financing rounds (Seed, private, strategic, public), the ecosystem, liquidity funds, budgets such as marketing, and then the team, the community, etc.

If I understand correctly, does this mean that a token that is not locked, whose purpose is for marketing and not for liquidity, still enters into the calculation of the market cap?

My second question is this: How is the token price calculated?

On CEXs, I suppose it's the law of supply and demand, so it must be the price of the last buyer?

But on DEXs, how is it defined?


***
slight digression: If what I said in my first point is true, I have the impression that for a lot of projects (especially in the play-to-earn space), the number of tokens in circulation listed on sites like Coingecko or CoinMarketCap is not at all correct, or am I mistaken?
****

One last question, which is actually a concrete example.

Let's take the example of a new project with the following characteristics:

- It has 10 million tokens
- 1 million are sold during an ICO at a price of $1
- The remaining 9 million are locked.

So if I understand correctly, the market cap is $1 million, right ?

If one million tokens that were locked suddenly become unlocked, assuming nobody sells or buys, the only thing that happens is that these 1 million tokens are unlocked.

Naturally, the price of the crypto will drop to $0.5, right?

Because if the price doesn't drop to $0.5 and remains at $1, it means that for crypto projects, all they need to do is generate new tokens to increase their market cap, which doesn't make sense to me.

That's all.
Thank you for your help.