One of the major advantages of Bitcoin over other assets is that there will only ever be 21 million coins and we can precisely predict the number of coins that will be in circulation with high certainty at any point in time.
Because of the cryptocurrency’s scarcity, each millionaire in the world cannot own even 1 Bitcoin, and the rising demand against a backdrop of a finite supply has contributed to the phenomenal price performance since 2010.
Since the inception of Bitcoin, thousands of other cryptocurrencies have been created. Many of these altcoins are nowhere near as scarce as Bitcoin, with some coins having a massive number of circulating units of over 1 billion. Supply dynamics are an important consideration when investing in a coin or token, as coins with a lower supply require smaller increases in demand for higher prices as compared to coins with a larger supply.
In this article, we’ll summarize the top 7 cryptocurrencies with a limited supply, have a network value of at least $250 million and a lower circulating supply (or maximum supply) than Bitcoin.
All figures were obtained from CoinGecko.
1. Numeraire (NMR)
- Circulating supply: 5.77 million
- Max supply: 11 million
- Current Price: $43.09
Numeraire is a decentralised, software-powered hedge fund built on the blockchain, which crowdsources predictions from data scientists all over the world to trade the stock market.
The native cryptocurrency is NMR which can be staked so that accurate predictions can get rewarded. If the overall hedge fund performs well, the returns are distributed via NMR to reward participants to create better prediction models and improve the performance even more.
The token was launched on Ethereum in February 2017 and initially had the same supply cap as Bitcoin (21 million). However, in June 2019, the supply cap was reduced to 11 million as part of a network upgrade. There was no initial coin offering or token sale as part of NMR's distribution, but 1 million tokens were allocated to 12,000 data scientists based on their participation in Numerai tournaments.
- Circulating supply: 10.29 million
- Total supply: 18.92 million
- Current Price: $239.13
DASH is a cryptocurrency aims to be digital cash and while its codebase was inherited from Bitcoin, it differs in several ways.
- Dash introduced InstantSend to facilitate faster transactions and PrivateSend, which allows users to make more private transactions using coin mixing techniques.
- Dash introduced the concept of masternodes, which carry out the InstantSend and PrivateSend functions. Those running a masternode can earn a return from holding 1,000 DASH.
- DASH's maximum supply is slightly lower than Bitcoin's, at just under 19 million coins.
- The block reward for DASH is reduced by 7.14% every 210,240 blocks (approximately 1 year), instead of by 50% every four years, as with Bitcoin.
Another interesting feature of DASH is that it is the longest running Decentralised Autonomous Organisation (DAO), where 10% of the block rewards are allocated to a treasury to fund proposals to improve the Dash network.
3. Kusama (KSM)
- Circulating supply: 8.98 million
- Max supply: 10 million
- Current Price: $303.99
Kusama is an independent, experimental version of the Polkadot network, where official updates are tested on the Kusama network first. The native token KSM has a circulating supply of just under 9 million coins and is used to power computation, allow holders to participate in securing the network and vote on upgrade proposals.
KSM tokens are locked in parachain slot auctions to create new custom blockchains using Kusama as a base layer. From the first 5 parachain auctions, more than 1.3 million KSM tokens have been bonded for crowdloans and this portion of the coin's supply will remain out of circulation for 12 months.
4. Compound Finance (COMP)
- Circulating supply: 5.40 million
- Max supply: 10 million
- Current Price: $414.07
Compound Finance is a decentralised lending platform based on Ethereum, where interest rates are paid out algorithmically on cryptocurrency deposits. The rates paid to depositors adjust automatically according to supply and demand, with users also receiving COMP tokens.
The number of COMP distributed per day to different markets. Source: Compound.Finance.
The project started without a token, but in summer 2020 introduced the COMP token to govern the protocol, which kicked off a wave of governance token launches and saw Compound take the top spot in terms of the DeFi protocol with the most value locked.
Compound Finance is now fully controlled by COMP holders, where the COMP token is used to propose and vote on changes to the protocol. There are expectations that token holders will be able to stake a claim on the cash flows of Compound in the future.
5. Gnosis (GNO)
- Circulating supply: 1.50 million
- Max supply: 10 million
- Current Price: $302.63
Gnosis is a decentralised prediction market built on Ethereum and GNO is the native token of the platform, which is used to generate OWL tokens. OWL tokens are used as collateral in Gnosis prediction markets and can only be created by locking GNO.
The native GNO token can also be used to participate in the Gnosis protocol's governance, where in the last stages of a proposal holders of the GNO token collectively determine the outcome of a proposal.
In April 2017, an initial coin offering for the GNO cryptocurrency raised 250,000 ETH (worth about $12.5 million at the time) by selling 4 percent of its supply. Using a Dutch auction, the token was sold for just under $30 and the sale ended in under 15 minutes.
6. Maker (MKR)
- Circulating supply: 901,310
- Max supply: 1.005 million
- Current Price: $3,762.43
MakerDAO is a decentralised autonomous organisation for the Dai stablecoin and the MKR ERC-20 token is used for governance of the platform allowing holders to vote on various parameters such as the stability fee, debt ceiling, types of collateral to be used, Dai Savings Rate and more.
MKR tokens were first distributed in November 2017 through private sales and has since become the most valuable DeFi-related token. Anyone can open a Maker vault, deposit some cryptocurrency as collateral and generate the Dai stablecoin as a debt against the collateral.
Along with the governance use case, MKR is also used as a balancing mechanism for the Maker protocol. If the protocol's system surplus exceeds a minimum threshold then MKR tokens are destroyed. On the other hand, when the protocol is running a deficit and the system debt exceeds a maximum threshold, then MKR are created and auctioned for Dai to recapitalise the system.
7. yearn.finance (YFI)
- Circulating supply: 35,666
- Max supply: 36,666
- Current Price: $37,667.53
yearn.finance is a decentralised asset management platform that has multiple uses ranging from liquidity provision, lending, to insurance. The main product in its ecosystem is Vaults which implements various yield farming strategies proposed by the community to maximise returns.
The governance token for yearn.finance is YFI and token holders are eligible to receive a portion of the protocol's profits. These profits are held in Yearn Treasury Vault, if the maximum of $500,000 has accrued then the rest of the profits are distributed to stakeholders.
YFI was launched with 0 supply without a pre-mine for the team or early investors. Instead, the 30,000 tokens were distributed equally to users of the platform and liquidity providers. After the launch of the token, the price of YFI briefly surpassed the price of Bitcoin, reaching an all-time high of 4.20 BTC in September 2020.
Historical YFI-BTC exchange rate. Source: CoinGecko.
While supply dynamics are one important factor to consider as an investor or trader, the demand side cannot be ignored and we must analyse these two factors in conjunction to make an investment decision.
-The Rollbit Team