What is tokenomics? How a crypto token's supply and design work
By SendPay Business · · 2 min read
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Tokenomics (token economics) is how a crypto token is designed: how many exist, how new ones are created, who holds them, and what they are used for. It shapes how supply changes over time, which is one of many things that can move a token's price.
Supply: total, circulating and maximum
Maximum supply is the most tokens that can ever exist, if there is a cap at all. Bitcoin, for example, is capped at 21 million. Total supply is how many exist now. Circulating supply is how many are actually available to trade, leaving out tokens that are locked up.
Issuance, vesting and unlocks
New tokens may be created as rewards for the people who run the network. Tokens given to founders and early investors are often locked and released over time, called vesting. When a large batch unlocks, the circulating supply can jump.
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Burns and utility
Some projects destroy tokens (a burn) to cut supply. Utility is what the token is actually needed for, such as paying network fees. A token with no clear use depends only on people wanting to hold it.
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Questions people ask
What is fully diluted valuation?
A token's value if every token were already circulating.
Fully diluted valuation calculator →How do burns change a token's supply?
Work out the supply after burns and new issuance.
Token burn calculator →When do locked tokens unlock?
See how a vesting schedule grows the circulating supply.
Token unlock calculator →What is a coin's market cap?
Work out market cap from price and supply.
Crypto market cap calculator →Read next
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This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. Other companies named in this guide are reference points only and are not affiliated with SendPay Business.