Circulating supply is a crypto specific term, that describes the theoretical available supply to be publicly traded for a coin or token at a specific point in time.
What does circulating supply refer to
Circulating supply refers to the quantity of a token that is considered available to be exchanged between 2 wallets at a point in time. For instance, at the moment this article is being written, the circulating supply for Ethereum is 120.6M of ETH coins. It means that there are 120.6M of ETH coins that can theoretically be moved from a wallet to another. It is being influenced by emission (inflation), unlocks, rewards, etc.
Coins or tokens that are either reserved for a special purpose, locked, or have been burned are excluded from the circulating supply because they are not exchangeable.
What is circulating supply used for
Circulating supply is usually the basis for calculation of the Market Capitalisation of a token.
It means that if there are 120.6M of ETH in circulation, and the price of ETH is 3000$, the market capitalisation of Ethereum is 361.8M $.
Which tokens are considered non exchangeable
Tokens that are either locked, or dedicated to a specific purpose are considered non exchangeable. This includes tokens that are either in vesting period, dedicated to be staking incentives, or not emitted yet.
Circulating supply vs Total supply
Circulating supply is also useful to be compared to total supply, since it is a sub cluster of total supply.
Circulating supply = total supply - non exchangeable coins or tokens.
Circulating supply vs Max supply
Circulating supply is also a sub cluster of Max supply.
Circulating supply = Max supply - ((non emitted tokens + non exchangeable tokens)