Supply-Adjusted Dormancy accounts for the impact of time on the Average Coin Dormancy metric. Because coin days are accrued over time, the potential CDD increases over time. As such, adjusting for supply (an increase in the number of coins in circulation over time) in the denominator provides a more proportional view of dormancy over the history of a market.
Supply-Adjusted Dormancy simply divides Average Coin Dormancy by the circulating supply (total amount of coins issued).
Reginald Smith and David Puell - Bitcoin Average Dormancy: New Views of a Classic On-Chain Metric