Adjusted Free Float Supply

Adjusted Free Float Supply is a metric used in cryptocurrency markets to determine the portion of a cryptocurrency's total supply that is genuinely available for trading. It excludes tokens that are locked, held by long-term investors, team members, or otherwise restricted from being traded. This adjustment provides a more accurate representation of the market's liquid supply.

Key Components Excluded

Adjusted Free Float Supply excludes several categories of tokens to ensure accuracy:

• Locked Tokens: Includes tokens in staking contracts, liquidity pools, vesting agreements, and smart contract locks.
• Strategic Holdings: Encompasses tokens held by development teams, project treasuries, early investors with lockup periods, and venture capital allocations.
• Non-Circulating Supply: Accounts for burned tokens, lost wallets, dead addresses, and tokens in blacklisted addresses.

Importance in Market Analysis

Adjusted Free Float Supply is crucial for providing an accurate measure of a cryptocurrency's tradeable supply. Unlike the total supply or circulating supply, this metric reflects the true liquidity of the market. This is essential for various analyses:

• Price Impact Assessment: Helps gauge potential price movements and understand market depth.
• Market Metrics: Enhances the accuracy of market capitalization calculations, trading volume ratios, and liquidity measurements.

Practical Applications

• Trading: Assists in position sizing, risk assessment, and slippage estimation.
• Investment: Aids in valuation metrics, supply dilution analysis, and portfolio weighting.

Calculation Considerations & Challenges

When calculating Adjusted Free Float Supply, several factors must be taken into account:

• Time Factors: Includes vesting schedules, lock-up periods, and token distribution timelines.
• Network Factors: Considers consensus mechanisms, staking requirements, and protocol rules.
• Market Factors: Takes into account exchange listings, trading pairs, market access, and geographic restrictions.

Determining Adjusted Free Float Supply involves overcoming various challenges:

• Data Accuracy: Managing multiple blockchain addresses, complex smart contracts, and cross-chain assets.
• Dynamic Nature: Adapting to continuous token releases, changing lock-up periods, and evolving staking programs.
• Technical Limitations: Enhancing blockchain analysis capabilities and ensuring visibility across different chains.

Things to Remember

• Accurate Liquidity Measurement: Adjusted Free Float Supply provides a more precise measure of a cryptocurrency's liquid supply by excluding non-tradeable tokens. This ensures better market analysis and decision-making.
• Exclusion of Restricted Tokens: The metric accounts for locked tokens, strategic holdings, and non-circulating supply. This helps in understanding the true available supply for trading.
• Essential for Market Metrics: It enhances the accuracy of market capitalization, trading volume ratios, and liquidity measurements. This makes it a critical component for investors and analysts.
• Regulatory Compliance and Transparency: Maintaining an accurate Adjusted Free Float Supply supports regulatory compliance and promotes transparency within the cryptocurrency market.