How Does 'Stock-to-Flow' Model Relate to Scarcity? ⎊ Path

How Does ‘Stock-to-Flow’ Model Relate to Scarcity?

The stock-to-flow model measures scarcity by dividing the current circulating supply ('stock') by the annual production ('flow'). A higher stock-to-flow ratio indicates greater scarcity because it takes longer to produce the current supply.

This model is often used to predict the long-term value of scarce assets like Bitcoin.

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Glossar

Stock-to-Flow

Flow ⎊ The Stock-to-Flow (S2F) model, initially popularized within the Bitcoin community, posits a relationship between an asset's market capitalization and its scarcity, quantified by its stock (total supply) and flow (rate of new supply issuance).