**Currently, almost all currency **(KAU and KAG)** that was ever minted got redeemed **(resold on the Exchange)** (because of mint cycling), so the total minted **(KAU and KAG in the Kinesis system)** is now about 100x bigger than the circulation (i.e. massive dilution). **(Does this equate to the number of those sitting on KAU and KAG in their accounts compared to the amount being spent or sent, I am not sure what circulation actually means here, is 100x being held compared to those transacting, isn't Exchange activity also included in circulation then)

The Circulation chart shows all currency that is in circulation, i.e. not redeemed. So this is the sum of all holders accounts.

But the denominator in the Minters Yield calculation is all currency that was ever minted, including what got redeemed. So this number never goes down. It can be found in the Minters Yield payment when you expand it (minted across all users).

**Suppose Kinesis grows 100x bigger, circulation will then also increase 100x. Without mint-cycling, much lower amounts will get redeemed** (changing the yield from Holders to Minters yield)**. So let's say for this example that nothing gets redeemed. That means all currency ever minted will only double while circulation multiplies by 100x. Suppose velocity stays the same, then the yield pool would grow 100x while your share of the total minted dilutes by 2x in this case. So your share dilutes, but it dilutes slower than the yield pool grows, which means your yields will rise. So you could say that your share dilutes, but your yield un-dilutes. **(Am I understanding the meaning of Dilutes and un-dilutes correctly here, in that the pool size increases 100x but your proportional claim on the Minters Yield has halved compared to previous distributions, but your total quantity of KAU or KAG received from the yield pool has now increased because you now have a smaller claim on a lot larger amount, so it is still in effect being diluted more but you are receiving a smaller slice of a much bigger pie so you get to eat more yum, must be coffee time)

I think you understand it correctly.

Suppose Circulation is 1 million KAU and all currency ever minted is 100 million KAU (i.e. 99 million has been redeemed). And you minted 1k of that. Then you have a claim of 1k/100m = 0.001%

Now suppose the system grows by a factor 100x after mint cycling ends (i.e. not much gets redeemed), as I described earlier. The Circulation grows to 100 million KAU and assuming velocity remains constant, then the yield pool also increases 100x. But total minted grows to only 100m+100m=200m. So your claim is now 1k/200m = 0.0005%, but on a yield pool that is 100x larger. So effectively you would earn 50x as much.

Of course there are many assumptions here. We don't really know how these things work out. How will velocity develop? How much will still be redeemed? How much will the system grow?, etc. But the mechanics you can see in the graph below.

Note that Holders Yield only depends on velocity, because when the system grows say 100x, the pool grows 100x but your percentage decreases by exactly the same factor. But KVT and Minters yield grow with the circulation (assuming constant velocity).

Minters Yield growth will eventually flatten out, because after high growth it will start to depend only on velocity, like Holders Yield.

However, the graph above is valid at only one point in time. The Minters Yield curve continuously shifts down relative to the other two curves, because always

*some* currency gets redeemed. At first that won't seem obvious because un-dilution because of system growth should outpace it. But when the system stops growing it becomes more visible. Of course we hope that we are only at the beginning of massive growth so it is not something to worry about now.

I told you Minters Yield is complicated

**Of course all this assumes that velocity doesn't change while circulation grows and we don't know yet how that will develop. Mint-cycling ending will make velocity fall** (Interesting point, I wonder how large a percent of the fee pool is currently generated by Mint cycling, if that falls of a cliff does the pool loose a big percentage of revenue)**, but partnerships and debit cards will make it rise. We don't know yet how this works out on balance. **(Hence the push to get Velocity to grow)

Mint-cycling is a very large factor now. But the organic part of the system operation has hardly started yet, so we need to see how things are going to work out. The future will show us.