Daily Token Circulation aims to eliminate several built-in deficiencies associated with Transaction Volume.
Transaction Volume is a metric that tracks the aggregate amount of tokens across all transactions that happened on the network on a certain date.
There are several issues with Trx Volume as an indicator. For one, it is inherently vulnerable to ‘tampering’ and inflation, by moving coins ‘from one pocket to another’ to simulate trader/network activity.
For example, Alice can move a small number of coins back-and-forth between two of her own addresses, making it appear as a spike in Transaction Volume, even though Alice is simply reshuffling coins over and over.
Even without tampering, Trx Volume can be very noisy, as it tracks all coins across all transactions.
For example, whenever you send coins to an exchange, they first enter a temporary (deposit) address created by the exchange, before moving to a main exchange wallet. Trx Volume will account for both of these transactions, essentially double-counting all coins moving to exchanges.
Daily Token Circulation solves both these issues by tracking the number of unique active tokens that are being transacted each day. This also makes Token Circulation a better indicator of true economic activity on the network, by reducing the potential for technical noise and artificial inflation that can be found in Trx Volume.
For example, here are both the Trx Volume and Daily Circulation graphs for ENJ for the past 90 days:
As you can see, the same two spikes are actually inverted on the two graphs: the first spike towers over the second on the Trx Volume graph, while the opposite is true on the Token Circulation graph.
The difference in token amounts between the two charts are also noteworthy. The first spike involved 94.1M unique ENJ, but the total Trx Volume of 306M (225% change), whereas the second spike involved 158.3M ENJ with the total Trx Volume of 222.4M (40% difference).
In other words, the first spike involved less unique ENJ across more transactions, while the second one involved more unique ENJ across less transactions. These two events can indicate very different holder behavior.
