In the world of Web3 and cryptocurrency, “Circulating Supply” is like the number of coins or tokens that are available and actively traded in the digital marketplace.

It’s the portion of the total supply that’s in the hands of investors and users. Here’s a simple breakdown:

1. Total Supply: Imagine there’s a big box of candies. This box contains a certain number of candies, let’s say 100. In the cryptocurrency world, this is called the “Total Supply.” It represents all the coins or tokens that have been created for that particular cryptocurrency.
2. Circulating Supply: Now, out of those 100 candies, 50 are already taken out of the box and being shared among friends. These 50 candies are like the “Circulating Supply.” It’s the portion of the total supply that’s out there in the market and being actively used.
3. Held by Users: The candies that are circulating are in the hands of people who own them, trade them, or use them for various purposes. Similarly, in the cryptocurrency world, the circulating supply consists of coins or tokens held by investors, traders, and users.
4. Trading and Transactions: Circulating supply is crucial for trading. When you see the price of a cryptocurrency on an exchange, it’s often based on the supply that’s actively trading, which is the circulating supply. It’s like determining the value of candies based on how many are already shared and available for exchange.
5. Locked or Reserved: Some candies might be kept in a locked drawer, meaning they’re not part of the circulating supply because they can’t be traded or used. In the crypto world, there are tokens that are locked for various reasons, and these are excluded from the circulating supply.
6. Influences Prices: The size of the circulating supply can influence the price of a cryptocurrency. If there’s a limited circulating supply and high demand, the price can go up, just like the value of rare candies can be higher.
7. Economic Indicators: Cryptocurrency enthusiasts and investors often look at the circulating supply as an important economic indicator. It helps them understand the potential for price movements and market dynamics.

In summary, “Circulating Supply” in the world of cryptocurrency is like the number of coins or tokens available and actively used in the market. It’s a critical factor for determining prices and understanding the dynamics of a particular cryptocurrency.

Just as you share candies with friends from the candy box, cryptocurrencies are shared and traded in the digital marketplace, and the circulating supply reflects this activity.