How does the free float formula affect the price stability of digital currencies?

1 answers

• ja97Sep 09, 2021 · 4 years ago
  The free float formula is an important factor in determining the price stability of digital currencies. It takes into account the percentage of a digital currency's total supply that is available for trading on the market. This formula considers factors such as locked tokens, reserved tokens, and tokens held by the project team or founders. By excluding these tokens from the calculation, the free float formula provides a more accurate representation of the available supply and liquidity of a digital currency. A higher free float generally indicates a more stable market, as there is a larger pool of tokens available for trading. On the other hand, a lower free float may result in higher price volatility, as there is less supply available to meet the demand. Therefore, the free float formula is an important tool for assessing the potential price stability of digital currencies and can help investors make informed decisions.
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