What is FDV (fully diluted valuation)?

Seeing a token with a small market cap, but a much bigger FDV next to it? The difference lies in the tokens that aren’t in circulation yet. Think of an apartment building where only a few units have been put up for sale: the value of the ones already on the market is one thing, and the hypothetical value of all of them, if priced the same, is another.

The usual calculation for fully diluted valuation is: current price × maximum supply. If, for example, a token costs €2 and its maximum supply is 100 million tokens, the FDV is €200 million. If only 10 million tokens are in circulation, the market cap is €20 million.

That €200 million isn’t money that has been invested in the project. It’s the result of a multiplication, assuming today’s price applies to the entire planned supply.

Why it matters

Comparing FDV with market cap shows how far today’s circulating supply is from the supply used in the calculation. A big gap may mean that many tokens are still locked or haven’t been issued yet.

When they’re released, they can increase the amount available for trading. If demand doesn’t keep up, there may be pressure on the price. An increase in supply doesn’t automatically mean a drop: the release timing, who holds the tokens and whether they sell also matter.

We see FDV as a useful complement to market cap, not a standalone test of whether a project is expensive or cheap.

What to watch out for

FDV doesn’t predict future market cap. The price can change a lot before all the tokens are in circulation. So it needs to be read together with the token unlock schedule, the vesting terms and the token allocation.

Also, platforms don’t always use the same basis for the calculation: some use total supply instead of maximum supply. For coins with no fixed supply cap, interpreting it needs extra care. Before comparing two FDVs, check which supply each one uses.