What is fully diluted valuation (FDV)?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 5 min
In short
FDV multiplies today's price by the maximum supply, including tokens that do not yet exist. It prices supply that has never traded at a price set by the supply that has. The wider the gap with market capitalisation, the heavier that assumption gets.
Key points
- Current price multiplied by maximum supply
- Counts unissued and locked tokens as if they existed
- The gap with market cap shows future issuance
- Nothing guarantees that supply trades at today's price
Definition
A valuation obtained by multiplying the current price by a token's maximum supply, or by the total supply including scheduled future issuance.
Market cap uses circulating supply; FDV uses maximum supply. If only a tenth of the supply circulates, FDV is roughly ten times the market cap. For tokens listed with a deliberately small float, the gap can be enormous.
The point of looking at FDV is that it puts future issuance into money terms. Where unlocks and vesting schedules remain, it helps you see how much supply is still queued to reach the market.
The limits are equally clear. It prices supply that does not exist yet at a price set in a possibly thin market. Issuance schedules get amended, and burns can reduce the maximum supply itself. FDV is a mechanical extension of today's price, not a measurement of anything comparable to enterprise value.
Watch out for
- · Cheap/expensive arguments that confuse FDV with market cap start from a broken premise
- · FDV cannot be computed for tokens with no fixed maximum supply
- · Issuance schedules can change, so check the assumptions behind any figure