Understanding Fully Diluted Value (FDV)
Fully Diluted Value (FDV) represents the theoretical market capitalization of a cryptocurrency or token if its entire maximum supply were in circulation. Calculated by multiplying the current token price by the maximum supply, FDV offers a forward-looking valuation that accounts for full dilution. This metric is essential for evaluating potential risks and rewards, particularly for projects with large portions of tokens yet to be released.
Key Characteristics of FDV
- Forward-Looking Metric: Estimates total valuation assuming all tokens are circulated.
- Supply Dynamics Insight: Highlights the impact of vesting schedules, staking rewards, and future token releases.
- Comparative Tool: Enables apples-to-apples comparisons between projects with varying circulating supplies.
Who Relies on FDV?
Primary Users
Investors
- Retail and institutional investors use FDV to gauge dilution risks and long-term value. A high FDV relative to current market cap may signal future price pressure from token releases.
Analysts
- Crypto researchers leverage FDV to assess project valuations, especially for early-stage tokens with low circulating supply.
Project Teams
- Teams communicate their token’s potential market size and vision to stakeholders using FDV.
👉 Discover how top investors use FDV to make data-driven decisions
When Does FDV Matter Most?
Critical Scenarios
- Token Launches: During IDOs/ICOs, FDV helps investors evaluate initial valuations.
- Low Circulating Supply: Projects with <20% circulating supply rely on FDV to project future dilution effects.
- Vesting Periods: FDV clarifies long-term valuation when tokens are locked for teams/advisors.
Where Is FDV Applied?
Common Platforms
- Exchanges: Binance, Coinbase Pro display FDV alongside market cap.
- Analytics Sites: CoinGecko and CoinMarketCap feature FDV for token comparisons.
- DeFi Protocols: Governance token valuations often reference FDV.
Why FDV Matters
Core Benefits
- Risk Awareness: Identifies potential dilution from future token unlocks.
- Valuation Clarity: Allows comparison across projects with differing supply distributions.
- Long-Term Planning: Aligns investor expectations with project roadmaps.
👉 Explore real-world FDV case studies in DeFi
Calculating FDV: The Formula
FDV = Current Token Price × Maximum Token Supply
Example Calculation
| Token Price | Max Supply | FDV |
|---|---|---|
| $10 | 1,000,000 | $10,000,000 |
Note: FDV assumes all tokens are circulating, which may not reflect immediate reality.
FAQs About FDV
Q: How does FDV differ from market cap?
A: Market cap uses circulating supply, while FDV uses max supply to project total valuation.
Q: Can a high FDV be problematic?
A: Yes. It may indicate heavy future dilution if tokens are released too quickly.
Q: Should FDV replace market cap in analysis?
A: No. Use both metrics—market cap for current valuation, FDV for long-term potential.
Q: How do vesting periods affect FDV?
A: They delay token circulation, making FDV a gradual rather than immediate concern.
Q: Where can I find a project’s max supply?
A: Check the whitepaper, Etherscan (for ERC-20 tokens), or CoinMarketCap’s supply details.
Q: Do all tokens eventually reach FDV?
A: Not necessarily. Some projects burn tokens or have indefinite inflation, altering max supply over time.