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Home » Blog » What Is FDV In Crypto? Fully Diluted Valuation Explained
Guide & Crypto Education

What Is FDV In Crypto? Fully Diluted Valuation Explained

Gixona
Last updated: 01/10/2025 4:53 PM
Gixona
5 months ago
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Disclosure: We are not a registered broker-dealer or an investment advisor. The services and information we offer are for sophisticated investors, and do not constitute personal investment advice, which of necessity must be tailored to your particular means and needs. !
What Is FDV In Crypto? Fully Diluted Valuation Explained
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In this article, I will discuss what FDV is in crypto and why it matters to investors. FDV, or Fully Diluted Valuation, is a key metric that shows the potential total value of a cryptocurrency based on its maximum token supply.

Contents
  • What Does FDV Stand For in Crypto?
  • How FDV Is Calculated
  • Why FDV Matters To Investors
  • Limitations and Criticisms of FDV
  • Can FDV be misleading?
  • Pros And Cons
  • Conclusion

Understanding FDV can help you evaluate a project’s future valuation and assess possible risks like token dilution.

What Does FDV Stand For in Crypto?

FDV in crypto stands for Fully Diluted Valuation. It indicates what a cryptocurrency’s worth would be in case all the tokens were circulating. The calculation is easy: FDV = Maximum Token Supply × Current Token Price.

What Does FDV Stand For in Crypto?

This metric allows investors to make an evaluation regarding a project’s future market cap. It is particularly important for new or low-supply tokens since it demonstrates the extent to which the dollar value of the token may be diluted due to the eventual release of locked or future tokens.

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How FDV Is Calculated

Formula: FDV = Maximum Token Supply × Current Token Price

Maximum Supply: the total number of tokens that will ever exist

Current Price: Market cap per token at the time of the calculation.

Purpose: Makes an estimation about the market value considering all tokens would be issued.

Difference from market cap: Market cap considers circulating supply while FDV considers total supply.

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Used for: Evaluation of long-term valuation and dilution risk of a crypto asset.

Why FDV Matters To Investors

Future Valuation Clarity: Offers insight into probable market cap once all tokens enter circulation

Risk of Future Token Unlocks: Emphasizes issues accompanying future token unlocks and potential inflation

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Value Assessment of New Projects: Assists in comparing new projects with low circulating supply

Subtokenomics: Prompts additional investigation concerning the schedule of supply and vesting.

Tokenomics Check: Helps revoke the gamble of buying tokens with boundless future dilution

Market Sentiment Gauge: Considerable FDV ratings may have varying impacts on market confidence and token price trend

Limitations and Criticisms of FDV

Limitations and Criticisms of FDV

Overestimates Token Value: Every token is assumed to enter circulation which in most cases will never occur.

Disregards Vesting Schedules: Locked or slowly released tokens are seldom accounted for.

New Projects are Misleading: Early stage tokens can be made to look overvalued as the expectation is FDV will increase.

Context on Token Utility is Missing: There is no actual demand on the use case for the token, but FDV is computed.

Sensitivity to Price Fluctuations: With token price, FDV varies which is always assumed to be exaggerated perception.

Time Factor Lacking: Without indicating the period, rate and speed new tokens will be issued is absent.

Can FDV be misleading?

Indeed, FDV (Fully Diluted Valuation) could misrepresent the project’s value if taken without context. It presumes every token in a project will eventually be circulating and possessed at the market price, which is unlikely. Many tokens are locked, vested, or scheduled for future release, meaning they might never all become accessible.

FDV calculation also ignores the fundamentals behind the project, such as the usefulness of the token, its demand, and how well it is accepted in the real-world. For new projects or those with low circulating supply, FDV can make the token appear overvalued, causing investors to misjudge the actual potential or risk of investment.

Pros And Cons

Pros of FDV (Fully Diluted Valuation)Cons of FDV (Fully Diluted Valuation)
Provides insight into the token’s total potential valueCan overestimate value if max supply is never reached
Helps assess future dilution risk from token unlocksIgnores token vesting schedules and lock-up periods
Useful for comparing early-stage projectsMay mislead investors about current market realities
Complements market cap to give fuller pictureDoesn’t account for token utility or demand
Encourages deeper research into tokenomicsFDV fluctuates widely with token price changes

Conclusion

FDV – or Fully Diluted Valuation – gives insight into the possible future market value of a cryptocurrency under the assumption all its tokens are in circulation. Although useful in analyzing long term valuation and dilution risks, it needs to be approached cautiously.

Token lockups, vesting schedules and real world utility must be accounted for, or the FDV will be misleading. With the other factors like market cap, tokenomics, and project fundamentals, more complete evaluations can be made relying on FDV.

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