Vaulting Rate is the rate at which users of the network vault their supply. Instead of comparing network issuance to total supply (🟣 Nominal Inflation Rate), comparing the daily rate of change of vaulted supply to total supply (🟢 Vaulting Rate). In is calculated as follows:
Vaulting Rate = diff(Vaulted Supply,1) * 365 / Circulating Supply
Two key takeaways emerge when observing Vaulting Rate:
For the most part, the vaulting rate of the network is larger than its inflation rate. This makes sense from first principles given Bitcoin’s price appreciation since its inception. Conversely, the vaulting rate drops below the inflation rate—and even below zero—during periods of exuberance at historical market tops, suggestive of the unusual rate of profit-taking and distribution by participants in the network.
Just as Bitcoin’s inflation rate drops over time, its vaulting rate drops as well—and seemingly proportionally so. Inflation drops given Bitcoin’s ever decreasing new issuance due to the deflationary nature programmed into the asset’s monetary policy; the vaulting rate drops, we believe, because, over time, less coins are being permanently lost.
Coined By
This metric was developed within the Cointime Economics framework for Bitcoin. This project was a joint venture between Glassnode and ARK Invest, with full details available in two formats: an overview primer (Version I published via ARK) and a comprehensive guide for specialists (Version II published via Glassnode).