What is a Completely Diluted Valuation (FDV) in crypto?
Understanding FDV in crypto is vital when evaluating a brand-new crypto project’s potential or reviewing an existing project. By showing a token’s possible ceiling, its all-time high market cap, FDV can be an essential metric to assist you compare early-stage projects with larger reserved allowances to more established projects that have a maximum supply that’s almost all in circulation. That said, FDV can highlight hidden dilution risk and offer you some insight into the blockchain network’s fundamental economic design.
In this guide, we’re going to go on a deep dive into what FDV is and how it relates to a cryptocurrency project and which cryptocurrency project’s potential market cap. We’ll take a look at FDV computed for real-world examples, how it may be impacted by market trends, and more.
What is Fully Diluted Valuation (FDV)?
Fully diluted valuation (FDV) is the representation of the maximum possible market capitalization of any particular cryptocurrency if all tokens in the circulating supply and future token releases were priced at the current market price. While market cap uses just the circulating supply (tokens easily trading on exchanges or held by investors), FDV represents every token specified by the protocol: those allocated to founders, developers, treasury, ecosystem rewards, and future staking or mining rewards.
Getting a clear image of FDV is essential when token release schedules cover years. Projects often vest large allotments to core contributors or partners, and as those tokens unlock, selling pressure can compress prices. A high FDV‐to‐market‐cap ratio warns investors that today’s price may not reflect tomorrow’s expanded float. On the other hand, a token with nearly 100% circulation, like Bitcoin, has an FDV and market cap that are almost similar, which extrapolates to a minimal dilution risk.
Understanding FDV also aids in comparing projects. Two tokens trading at $1 each may look similar by price, but if one caps supply at 10 million and the other at 1 billion, their FDVs differ by 100x. This variation fully highlights vastly different growth potential and expectations, tokenomics design, and the potential future value or downside.
When it comes to practical applications, FDV guides allocation decisions, risk management, and scenario modeling. It complements on‐chain metrics (staking ratios, treasury balances) to provide a fuller financial picture and helps you to distinguish the truly scarce assets from those whose future supply implies more future dilution, pushing the asset’s future price down.
How to Determine Fully Diluted Valuation?
Calculating FDV is simple once you know 2 variables: the current token price and the protocol’s maximum token supply.
Determine Existing Token Price: Use a reliable data source or exchange price feed for the token’s last traded price in USD (or your base currency).
Identify Maximum Token Supply: Check the project’s smart‐contract code, white paper, or tokenomics section for the total number of tokens that can ever be minted– this includes circulating tokens, tokens locked in vesting schedules, and any future token issuance for community incentives, development, or reserves.
Apply the FDV Formula: Price(current) x Tokens(all) = FDV. If we have a token trading at $0.50, with a lifetime limit of 200 million tokens: ($0.50) x (200,000,000) = $100 million FDV.
Compare FDV and Market Cap: Current market capitalization is the current token price times the circulating supply. If this same token only has 50 million tokens currently circulating, ($0.50) x (50,000,000) = $25 million. When you compare the FDV to the market cap, it can highlight a future potential for dilution as those tokens unlock.
Why is FDV important?
There are several reasons understanding FDV in crypto is crucial. It is important, first of all, for complete dilution awareness. It can also be a key metric for helping evaluate risk and strategize risk management, as a tool for quick comparative valuation, to help gain tokenomics insight, and as a window into governance. Let’s have a closer look.
- Dilution Awareness
- Risk Management
- Comparative Valuation
- Tokenomics Insight
- Governance and Continuous Strategy
FDV vs. Market Cap: What’s the Difference?
Market capitalization measures a token’s value based solely on its circulating supply, the coins currently in investors’ hands, multiplied by the market price. In contrast, FDV multiplies that same price by the maximum token supply specified in the protocol, including tokens reserved for future issuance, team allocations, and community incentives.
While market cap reflects present‐day liquidity and the value attributed to tokens actively trading, FDV provides a forward‐looking ceiling that reveals dilution risk as locked or unissued tokens enter circulation.
By layering FDV analysis with token‐release schedules and on-chain demand metrics, you get a multidimensional view of both supply‐side dilution and demand‐side absorption capacity, essential for timing entries, setting risk limits, and comparing disparate tokenomics designs in a rapidly evolving market.
Limitations & Risks of FDV
- Presumes Continuous Price
- Overlooks Unlock Timelines
- Overstates Value for Deflationary Models
- Neglects Demand Dynamics
- Misleading for Governance Tokens
FDV in Real Crypto Projects
- The Case of Stellar (XLM)
- Locked Tokens in Chainlink (LINK)
- The Polkadot (DOT) Treasury
Conclusion
Fully diluted valuation is a fundamental, forward-looking lens through which to view a token’s potential supply and the related dilution risk. By comparing the FDV with the present market cap, you can discover how much potential value can be locked in future token releases. That future release might be intended for creators, community members, or developers. Integrating FDV into your research study helps you manage risk, set realistic price targets, and distinguish between tokens with limited upside versus those facing heavy unlock schedules. Either way, always use FDV in conjunction with other metrics to get a fuller picture that will help make more informed investment decisions.
FAQs
What does FDV stand for in crypto?
FDV stands for fully diluted valuation, which is the total market value of a cryptocurrency if every token of the maximum supply were issued at the current token price.
Is high FDV good or bad?
A high FDV relative to market cap signals significant future dilution risk, which can exert selling pressure as locked or reserved tokens unlock.
Is FDV the same as market cap?
No. Market cap multiplies price by circulating supply only, while FDV multiplies price by the maximum possible supply, including tokens not yet issued or unlocked.
Is Fully Diluted Valuation a useful metric?
Yes, when used alongside market cap, vesting schedules, and on-chain demand metrics. FDV reveals ‘hidden’ supply and helps model how future token unlocks could impact price and governance power.
