Today I want to share a topic that many of you often get confused about when analyzing cryptocurrencies. That is, concepts related to supply — what is maximum supply, circulating supply, total supply, and all the terms related to token quantities.

Let's start with the basic definitions. The maximum supply is the total number of tokens that a cryptocurrency can ever exist. Next is the total supply — which is the current maximum number of tokens available. And what is circulating supply? It is the number of tokens that are currently being issued and circulated in the market.

I'll give a specific example with Solana (SOL) to help you visualize. Currently, SOL has about 578 million tokens in circulation, but the total supply is 624 million tokens. This means there are about 46 million tokens that have not yet been issued. These tokens are usually locked for the team, for farming, or for other project purposes.

The interesting part is that whether circulating supply versus total supply determines the token's price significantly. When circulating supply is lower than total supply, it means there are still many tokens that could be released in the future. That’s why you need to analyze carefully where these unissued tokens are locked, how long until they are unlocked.

Market capitalization is the next concept you need to understand. It is calculated by multiplying the token price by the circulating supply. For SOL, the current market cap is about $51.6 billion. But there is another concept called fully diluted market cap — calculated by multiplying the token price by the total supply (not just circulating). For SOL, this figure is $55.75 billion.

The difference between these two numbers is very important. If the fully diluted market cap is much higher than the current market cap, it indicates there is significant upside or downside risk depending on how tokens are issued. You should thoroughly research tokenomics, issuance schedule, and related factors to understand what circulating supply means in the context of each project.

Especially for coins without a supply cap (like SOL), you need to monitor inflation and token issuance rate. This directly impacts the future price of the token. I recommend you spend time analyzing these metrics carefully before investing, as it will give you a deeper insight into the true potential of a project.