Tokenomics

Fixed supply versus inflationary supply

Some tokens have a hard cap, like Bitcoin's 21 million coin limit, meaning issuance eventually stops entirely.

Others are inflationary by design: new tokens are created on an ongoing schedule, sometimes to pay network validators or to fund a treasury. Inflationary supply is not automatically bad, but it means a holder's share of the total keeps shrinking unless the token count they hold also grows.

Unlocks and vesting

Many tokens are distributed to founders, early investors and team members subject to a vesting schedule, meaning those tokens unlock gradually over months or years rather than all at once.

An unlock makes previously restricted tokens transferable at a known, calendarable date. It does not prove the holders will sell, and it does not prove the price will fall — holders may keep, stake or sell them, and markets may already expect the event. Reading the vesting schedule tells you when transferable supply is scheduled to change.

Market cap, fully diluted valuation and supply

Circulating supply is the number of tokens currently transferable in the market. Total or maximum supply includes tokens not yet issued or still locked.

Market capitalisation is price × circulating supply. Fully diluted valuation (FDV) is price × maximum supply. Hypothetical example: a token at $2 with 100 million circulating and 1 billion maximum has a $200 million market cap and a $2 billion FDV. The gap shows how much supply is still to come.

Data sites calculate these figures from project disclosures and their own methods, so they can differ between sources. Neither figure is a company valuation: token holders typically have no claim on a company's profits or assets.

Who holds the allocation

Look at how the total supply was divided among the public, the founding team, early investors and a project treasury. A supply concentrated heavily among insiders means a small number of holders can influence price far more than ordinary buyers can.

A treasury controlled by a small team also represents a pool of tokens that can be sold or deployed at the team's discretion, which is a form of concentration risk distinct from ordinary market volatility.

Fee burns and staking

Some networks burn (permanently remove) a portion of transaction fees, which reduces circulating supply over time, all else equal.

Staking lets holders lock tokens to help secure a network in exchange for rewards, which are themselves often paid from new issuance. Staking can also reduce the supply actively trading at any moment, but it does not remove the risk of the token's price falling, and staking rewards are not the same thing as an investment return on a business.

Why mechanics beat slogans

A project's marketing language — 'deflationary', 'community-owned', 'limited supply' — is not a substitute for reading the actual numbers in its documentation.

Two tokens can both claim scarcity while one has a hard, enforced cap and the other has a supply that can be changed by a governance vote controlled by a handful of large holders. Only reading the mechanics tells you which is true.