Crypto News: Token-Stock Comparisons Have Been Wrong All Along, New Framework Shows

Key Insights:

• Crypto news and data providers showed wildly different supply metrics for identical tokens, creating valuation discrepancies worth billions.
• Artemis and Pantera Capital introduced the Outstanding Supply framework to mirror the stock market’s concept of Outstanding Shares.
• The Hyperliquid token revealed a $17.3 billion valuation gap between different data providers, who used inconsistent supply metrics.

Token valuations compared to traditional stocks produced misleading results for years due to inconsistent supply measurement standards across crypto data providers.

Artemis and Pantera Capital released a framework on Aug. 26 called “Outstanding Supply” that aimed to standardize how investors measured token economics against equity markets.

Token-Stock Comparisons Failed Under Standard Metrics Recent Crypto News and Data Shows

Traditional crypto valuation relied on two primary metrics that distorted comparisons with stocks.

Fully Diluted Valuation (FDV) is calculated by multiplying the token price by the maximum possible supply. This approach resembled valuing Uber at $469 billion using its 5 billion authorized shares rather than the $196 billion market cap based on outstanding shares that investors actually referenced.

At the same time, definitions of Circulating Supply varied dramatically among data providers. Some counted locked tokens while others excluded them. Some included treasury wallets while others removed them completely.

These inconsistencies created scenarios where Hyperliquid showed valuations ranging from $10.5 billion to $27.8 billion, depending on the data source consulted.

The problem extended beyond mere numbers. Investors attempting to calculate price-to-earnings or price-to-sales ratios found themselves comparing fundamentally different metrics.

A token valued on FDV appeared artificially cheap compared to stocks, while the same token valued on restrictive Circulating Supply definitions appeared overvalued.

Outstanding Supply Framework

Outstanding Supply mirrored the stock market’s Outstanding Shares concept by excluding protocol-owned tokens from valuation calculations.

The formula subtracted Total Protocol Holdings from Total Supply. Protocol Holdings included foundation wallets, DAO treasuries, labs entities, and programmatic distribution contracts that remained under protocol control.

This approach eliminated tokens that functioned like treasury shares in traditional companies. Treasury shares existed but were not owned by external investors, making them irrelevant for market valuation purposes.

The framework recognized that foundation-held tokens served operational purposes rather than representing investor ownership stakes.

Protocol Holdings encompassed several categories that traditional Circulating Supply metrics often mishandled.

DAO treasuries contained tokens designated for governance and ecosystem development. Labs entities held tokens for research and development activities.

Programmatic distribution contracts automatically released tokens over predetermined schedules without immediate market impact.

Tackling Valuation Issues

Hyperliquid demonstrated the framework’s practical implications across different supply measurements.

Maximum Supply suggested a $43 billion valuation using 1 billion total tokens. The Total Supply is indicated as $24.8 billion, based on 577 million minted tokens. Outstanding Supply calculated $20.9 billion after excluding 92 million foundation-held tokens.

The Circulating Supply was reported to be $10.5 billion, using only tradable tokens currently available on the market.

The Outstanding Supply metric provided the closest equivalent to how stock markets valued companies using outstanding shares rather than authorized or issued shares.

DefiLlama’s Outstanding FDV placed Hyperliquid at $27.8 billion, implying 647 million outstanding tokens.

This figure exceeded the 577 million tokens actually minted, revealing calculation errors in their methodology.

CoinGecko’s Circulating Supply valuation reached $14.5 billion, suggesting 337 million circulating tokens. However, this number included protocol-owned wallets that were not actually trading in secondary markets.

Potential Clarity and Recent Crypto News

The framework established three distinct supply measurements modeled after stock market standards.

The Total Supply functioned like Issued Shares, representing all minted tokens minus the tokens burned. Outstanding Supply resembled Outstanding Shares by excluding protocol holdings from investor-owned tokens.

Circulating Supply mirrored Floating Shares, counting only tokens available for immediate trading without vesting restrictions or lock-up periods.

This structure provided investors with the same level of transparency available in equity markets, where share counts were standardized and clearly defined.

Institutional investors relied on consistent metrics to evaluate investment opportunities across asset classes. Outstanding Supply enabled accurate valuation multiples, such as price-to-earnings and price-to-sales ratios.

These multiples became artificially inflated when calculated using FDV, which penalized projects with ample unvested token supplies.

The framework then aims to remove guesswork about token economics and supply risk that previously deterred institutional capital allocation to crypto markets.

As a result, standardized supply metrics can provide the institutional-grade transparency necessary for broader adoption of crypto among traditional finance participants.