8. Introducing Token Holder Distributions

Table of Contents

Introduction to Token Holder Distribution

This section helps you understand where the circulating supply is currently being held. They are divided into the following mediums:

  • CEX
  • DEX
  • Contracts
  • EOA (wallets)
  • Bridge

Why is token distribution important to consider?

While circulating supply is a solid metric to analyze a project’s tokenomics, the reality is that it only scratches the surface in terms of gaining actionable insights for your investing thesis. Instead, diving deeper and analyzing the token distribution can help us better understand the overall impact that different market events can have on token price.

Let’s use an example to explain what we mean.

Here’s our analysis for sample token $ABC.

Recently, we noticed that a Top Holder who holds 10% of the circulating supply of $ABC just transferred all of it to Binance. Most likely indicating that they plan to dump all these tokens into the market.

So, how do we measure the impact of this? Is it as simple as looking at the 10% of the circulating supply they own?

Unfortunately, no. But this is why the Token Holder Distribution is so valuable – we can use it to predict the impact of market events like these accurately.

Here’s how we put it to use.

By analyzing the hypothetical Token Holder Distribution of $ABC, we noticed that 25% of the circulating supply is still in the contract, with 15% of the circulating supply used as liquidity for bridges. Therefore, the actual circulating supply of $ABC token is only 60% of what we thought it was.

This means if the Top Holder decides to dump all their $ABC tokens into the market, the impact of it will be much higher since they actually hold 17% of the circulating supply and not just 10%.

This number was calculated with the following equation: 10/(100-(25+15)) = 16.67%

Get the full package.

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