Why Is There Inconsistency in ALGO’s Market Cap Calculations?

Mr. Huber, a crypto Twitter analyst self-described as a ‘Sleuth looking for truth,’ has identified a variance in Algorand’s tokenomics. According to Huber, using ALGO’s price to calculate its total market cap, results in the circulating supply and gives a figure almost $1.5 billion higher than the effective number.

In a tweet, Huber noted that ALGO had a supposed supply of almost 13 billion in October 2022, although only 10 billion ALGO tokens exist. However, the analyst referenced a publication by Algorand to explain the reason for the variance in figures.

In June 2023, Algorand published a blog post noting that it would no longer refer to the Liquid Supply Metric for ALGO. ALGO’s supply metric is now only based on Circulating Supply, as confirmed by the blockchain project.

At the time of making that decision, Algorand had begun a review process for its Foundation’s wallet architecture. The review aimed at streamlining the over 180 active wallets connected to the Foundation. Algorand believes the exercise will improve efficiency and help the community understand their on-chain activity.

Algorand developed the Liquid Supply Metric with its Participation Rewards program that ended in May 2022. Having acknowledged the effectiveness of the metric, the project noted it had outlived its usefulness as an alternative measure of supply. Therefore, Algorand elected to reset the legacy Liquid Supply of ALGO to be equal to its Circulating Supply. That would ensure block explorer services receive correct API feeds and can transition smoothly.

CoinmarketCap data shows Algorand’s market cap to be $848,344,818, while its circulating supply was 7,799,683,220 ALGO. The price of ALGO was $0.1087 at the time of writing.