✉️ [Newsletter] CMC Doesn't Suck - Messari Unqualified Opinions

Crypto tokens are a unique beast. For projects, token treasury management sits somewhere on a spectrum between cap table management (how companies manage their equity), and natural resource management (how companies manage their commodities portfolio). Unlike many traditional asset classes, crypto tokens have centrally issued tokens from a single creator, with predetermined, fixed total supplies and strategic reserves for key stakeholders like founders, an affiliated foundation, and key advisors. This structure creates a situation where unclear circulating supply is the norm vs. the exception, and that is a problem. Circulating supply is more than a mere input into a vanity metric like “market cap”, it’s the denominator you need to understand crypto’s hidden inflation. The basics we get from day one of a token issuance are:

• What is sold to token sale purchasers and liquid
• What is sold to token sale purchasers and illiquid (subject to vesting)
• What is held in the project coffers that is liquid
• What is held in the project’s coffers that is illiquid
• What is earmarked for strategic distribution (rather than direct sale)

Even with this information, the line between what is liquid and what is illiquid (e.g subject to vesting) is difficult to ascertain at first glance. This makes things as basic as “market cap” difficult to track. Circulating supply, or what is actually available in the market, is an important and tricky metric to scrape. We can only fix this through a combination of blockchain transaction analyses and ICO team and investor disclosures. Some self-regulation would go a long way towards helping us gather the inputs we need to level the playing field between crypto funds and retail investors.

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