Awarded once after a correct answer.
Separate valuation arithmetic from price forecasts
Useful first : What is a blockchain?
Read the mechanics · Step 6 / 6
Tokenomics describes issuance, distribution, incentives and rights.
The essentials
Tokenomics describes issuance, distribution, incentives and rights. Start by distinguishing circulating supply, total issued supply and a maximum supply when one exists. Data providers may use different circulation definitions, so a comparison needs a consistent basis and observation date.
How it works
Market capitalisation multiplies price by circulating units. Fully diluted valuation applies the price to a broader supply assumption, often the maximum or total supply. Read the chosen definition. Neither number is a pool of cash available to holders, and neither tells you how much could be sold without moving the market.
What to watch
An unlock changes restrictions on existing allocations; issuance creates units; burning removes units under protocol rules. These events can overlap but are not synonymous. Identify beneficiaries, dates, conditions and governance powers. Released tokens are not necessarily sold immediately.
Understand the details
Construct a supply bridge from opening units through issuance and burns to closing units, then track the subset considered circulating. A vesting schedule changes availability and incentives, but price also depends on demand, liquidity and expectations. Run scenarios with explicit supply and price assumptions rather than treating an unlock percentage as an automatic percentage price fall.
Boundaries and common mistakes
A maximum supply may be absent or subject to governance. FDV comparisons can mislead when their denominators differ.
The mechanism at a glance
- 01Define supply
- 02Map allocations
- 03Model unlocks
- 04State valuation assumptions
Read these as connected concepts, not necessarily consecutive steps.
Read the explanation
Construct a supply bridge from opening units through issuance and burns to closing units, then track the subset considered circulating. A vesting schedule changes availability and incentives, but price also depends on demand, liquidity and expectations. Run scenarios with explicit supply and price assumptions rather than treating an unlock percentage as an automatic percentage price fall.
Put the mechanism into context
A fictional token costs €2, has 10 million circulating units and a stated maximum of 50 million. Calculate current market cap and maximum-supply FDV at that unchanged price.
Apply it in the workshop →What this mechanism does not guarantee
A maximum supply may be absent or subject to governance. FDV comparisons can mislead when their denominators differ.
The distinction that changes the analysis
At a fictional price of €2, 10 million circulating tokens imply €20 million, while 100 million total tokens imply €200 million fully diluted. Neither multiplication forecasts future price. Supply definitions and future release conditions still need examination.
Explain it yourself
Revisit the case above. Name what is established, what remains to be checked and the evidence needed to conclude. A strong answer addresses both sides of the diagram.
Apply the lesson to a case
A fictional token costs €2, has 10 million circulating units and a stated maximum of 50 million. Calculate current market cap and maximum-supply FDV at that unchanged price.
2 × 10 million = 20 million; 2 × 50 million = 100 million. These are valuations under a fixed-price assumption, not cash balances or forecasts.
Prepare a correction note
Describe the passage and the proposed correction. This creates a local note for you to share; it sends nothing. Do not include personal or confidential information.