Total Market Supply

How do you increase the total supply in the market?

As we mentioned earlier, the total market supply of a particular Cryptocurrency can be increased in a number of ways, but this factor largely depends on the design of the Cryptocurrency or token.

Below we list some of the most used ways to create new units of a Crypto asset:

• Through mining: It is the most common way and used by the protocols to increase a significant amount of Cryptocurrencies. It consists of the use of advanced computer equipment to calculate complex mathematical problems and as a reward an amount pre-established by the system of new Cryptos is given to the miner who has solved the problem. It is the most popular method since it is based on the model that Bitcoin uses to create more units.
  Let’s remember that some time ago there was only this way of creating new units and many Blockchain projects took it as a reference, but thanks to the development of new methods there are much more feasible and environmentally friendly options.

• Through participation protocols: The user participation protocol is a type of “mining” that has been recently implemented by some of the Cryptocurrencies that have been gaining relevance in the Cryptocurrency ecosystem. Examples of this are the Crypto ecosystems of Cardano, Solana and soon Ethereum.
  It consists of the creation of a kind of safe where Cryptocurrencies are stored that cannot be used and must remain there for an indefinite period of time. This process entitles the user to participate in the block verification processes, which allows them to earn new Cryptos for doing so; Unlike conventional mining, this system is much friendlier to the environment since it does not use computer equipment that consumes too much energy.

• Through anchoring to other assets: It is the method used by stablecoins or stablecoins since it allows the token to be anchored to a physical asset, be it a currency such as the Dolar or the Euro, or to a precious material such as Gold. There is also a variant of this method that allows the anchoring to other digital assets through the use of smart contracts such as the DAI, generally these systems allow the burning or destruction of tokens since an infinite number of tokens could be generated, thus affecting their value or price in the market .

• Through algorithms: It is the least common of all and they are generally used in closed-use platforms such as the XRP Cryptocurrency where a consensus algorithm controls the issuance and blocking of XRP units, it makes use of complex mathematical algorithms for its operation.