A post from Zach Herbert at Sia Tech, written last April on using total tokens vs circulating tokens for calculating market caps.
Every site we could find that lists out tokens by price, volume and market cap does so based on circulating supply rather than total supply. Circulating supply indicates how many coins are in circulation, but does not include coins held by the project. By contrast, total supply includes coins in circulation + coins held by the project.
Here is our list of recommendations to remedy this issue:
- Replace the existing flawed market cap metric with total market cap on sites such as coinmarketcap.com.
- Add a new field called inflation factor.
- Add both metrics to exchanges.
It’s something that has bothered us as well. When doing our own ICO analysis, we always look at the total value of all tokens, rather than the amount being raised, which is often 50% or less of total tokens. It’s may not be entirely correct in all cases, especially when there is a usage for some of the tokens not released, but it’s a more accurate look than only circulating tokens.