fdv vs market cap

What Is Fully Diluted Valuation (FDV)?

A theoretical market capitalization calculated based on the total token supply.

Fully Diluted Valuation (FDV) is determined by multiplying the current token price by the total number of tokens that will ever exist, including those yet to be unlocked—such as team allocations, ecosystem rewards, and other tokens scheduled for future release. Think of it as valuing a company by the entire warehouse inventory, not just what is currently on the store shelves.

For example, if a token is priced at $2 with a total supply of 1 billion, the FDV would be $2 billion. If only 100 million tokens are currently circulating, then the circulating market cap is $200 million—a tenfold difference between the two metrics.

Why Should You Understand Fully Diluted Valuation (FDV)?

FDV helps you spot projects that may seem “cheap” but are actually expensive when considering future token unlocks.

Many newly issued tokens have a low circulating supply, so their price can be easily driven up by small trades. Looking only at unit price or circulating market cap might make a project appear affordable, but FDV accounts for all tokens that will eventually enter circulation, offering early insight into potential sell pressure and realistic valuation ranges.

For projects with high private allocation, long vesting periods, or those newly listed on exchanges, FDV serves as a more reliable benchmark for comparing size and pricing across similar projects.

How Does Fully Diluted Valuation Work?

FDV depends on two main factors: price and total supply.

• Price: The current trading price, which fluctuates with market conditions.
• Total Supply: The maximum number of tokens set out in the project’s whitepaper or smart contract, including future unlocks.

FDV = Current Price × Total Token Supply.

A key factor in interpreting FDV is “vesting.” Vesting refers to locked tokens gradually becoming available for trading according to a schedule. Common scenarios include team and early investor vesting periods, periodic ecosystem reward distributions, or emission from fees and mining rewards. Unlocking increases circulating supply and can introduce additional selling pressure. Therefore, even with the same FDV, the pace of unlocking can have varying short-term impacts on price.

A practical four-step approach:

1. Check Total Supply: Review the “max supply” field in the project whitepaper or on tracking platforms.
2. Find Current Price: Refer to the latest spot price on an exchange.
3. Calculate FDV: Multiply current price by total supply.
4. Review Unlock Schedule: Focus on the proportion of new tokens entering circulation over the next 3-6 months to assess short-term supply changes.

Where Does Fully Diluted Valuation Commonly Appear in Crypto?

FDV is most relevant for newly listed tokens, projects with high locked supply, or those with ongoing incentive emissions.

• On Exchanges: When a new token lists on Gate, its page displays price, circulating supply, and total supply. If total supply is much higher than circulating supply, the FDV/circulating market cap ratio is typically large. For example: 10 million circulating out of 1 billion total at $2 per token equals a $20 million circulating cap and $2 billion FDV—a tenfold difference.
• Fundraising & Launchpads: During Gate Startup launches or other token sales, announcements usually specify initial circulating and total supply. Investors can estimate FDV to benchmark initial pricing against similar past projects and avoid being misled by apparent low prices.
• DeFi Governance Tokens: Many protocols issue governance tokens as ongoing liquidity incentives. If emissions are fast or vesting periods are long, FDV may remain high even when prices are stable, signaling persistent future supply pressure.

How Can You Mitigate FDV-Related Risks?

Make decisions around information, portfolio size, and timing.

1. Benchmark FDV vs. Sector Leaders: Compare your target token’s FDV to that of established projects in the same sector to identify overvaluation.
2. Examine FDV/Market Cap Multiples: Many traders use the FDV-to-circulating market cap ratio as a quick risk gauge; a higher multiple means greater potential price impact from future token releases.
3. Monitor Key Unlock Dates: Pay close attention to significant unlocks in the next 3 to 6 months; avoid taking large positions right before major unlocks.
4. Assess Liquidity and Volume: Check Gate’s order book depth and trading volume; thin liquidity combined with high FDV can amplify short-term volatility.
5. Scale In and Use Stop-Losses: For new tokens, build positions gradually and set stop-losses to avoid being caught off guard by unlock-induced volatility.

What Are Recent Trends or Noteworthy Data Regarding FDV?

Over the past year, two key metrics have drawn attention: the FDV-to-circulating market cap ratio and the impact of unlock schedules on volatility.

• Timing: Many projects will enter late-stage vesting/unlocking through 2025. The market increasingly tracks “proportion of new tokens unlocked in the past six months.” Common disclosures include “X% of total supply to be unlocked in next 6 months” or “Y% released monthly.” High monthly unlock rates increase circulating market cap (even if price holds steady), raising expectations of sell pressure.

Case Study Examples (for illustration only):

• Example A (Q3 2025 Announcement): Project has a total supply of 1 billion tokens at $2 each (FDV $2 billion). With 100 million circulating ($200 million market cap), and another 200 million scheduled for unlocking over six months (20% of total). If price remains constant, circulating market cap would rise to $600 million after six months, while FDV stays at $2 billion—demonstrating how unlocks increase potential sell pressure.
• Example B (2025 Thresholds): Community discussions often cite an “FDV/circulating market cap” multiple of 5-10x as a high-risk zone. If the multiple approaches this upper bound and large unlocks are imminent, risk appetite tends to decline.

Practical observation method: On Gate or major tracking sites, check each token’s “total supply,” “circulating supply,” and “unlock schedule.” Track two metrics—FDV/circulating cap multiple and percentage of new tokens unlocking over six months—to identify high-risk candidates.

How Does Fully Diluted Valuation Differ from Market Cap?

FDV values “total inventory,” while market cap focuses on “stock on shelves.”

FDV uses total token supply to reflect theoretical maximum value after all tokens are unlocked; market cap uses only currently circulating tokens, making it a better indicator of present supply-demand dynamics. Neither metric is universally superior—they answer different questions.

Comparison Example: Price $2, total supply 1 billion, circulating supply 100 million—FDV is $2 billion, market cap is $200 million. If another 200 million unlock over the next year at constant prices, market cap rises to $600 million while FDV remains unchanged—showing how increasing circulation affects short-term valuation.

Usage tips: Use FDV for long-term project size comparisons; use market cap for short-term liquidity and volatility assessment. For new listings or high-lockup projects, monitor both metrics—especially the FDV/market cap ratio and unlock schedule.

Related Terms

• Fully Diluted Valuation (FDV): The total theoretical market capitalization assuming all tokens are in circulation; used to evaluate a project’s maximum potential value.
• Market Cap: The product of current price and circulating supply; reflects real-time market valuation.
• Token Unlock: The process by which locked tokens are gradually released into circulation, potentially exerting downward price pressure.
• Dilution Rate: The degree to which future increases in token supply reduce existing holders’ ownership; reflected in the FDV-to-market cap ratio.
• Tokenomics: The design of a project’s token distribution, release schedule, and supply mechanisms—directly influencing long-term value trends.

FAQ

Which Better Reflects Real Value: FDV or Market Cap?

Market cap reflects current market conditions, while FDV reveals potential dilution risks. Market cap = current price × circulating supply; it can be inflated easily. FDV = current price × total supply; it factors in all future tokens and better anticipates long-term investment risk. Both should be referenced before investing—projects with low market cap but extremely high FDV warrant extra caution.

Why Is FDV Sometimes More Than 10x Higher Than Market Cap?

This highlights a project’s token release strategy. Many projects initially release only a small portion of tokens to the market while locking up large allocations for teams, investors, or ecosystem funds—gradually unlocking over time. As these tokens enter circulation, increased supply can pressure prices downward. Projects with much higher FDV than market cap face greater dilution risk; always review unlock schedules and market absorption capacity.

Is It Reliable to Use FDV When Selecting Investments?

FDV is an important reference but not a sole determinant. Low-FDV projects may appear cheap but could face significant dilution pressure if a high proportion of tokens remain locked. Always consider fundamentals, tokenomics model, team quality, and genuine utility. Use FDV to filter options but research the whitepaper and unlock plans before committing—don’t invest blindly just because FDV seems low.

How Can I Quickly Assess Whether a Project’s FDV Is Reasonable?

Compare with leading projects in the same sector. If a project’s FDV is much lower than peers, it could be an opportunity—or signal fundamental issues; if much higher, proceed with caution. Review tokenomics details: total supply, circulating percentage, unlock schedule. As a rule of thumb, projects with less than 20% circulation and an FDV over five times higher than sector peers are high risk.

Do Exchanges Rank Projects by Market Cap or FDV?

Most exchanges—including Gate and CoinMarketCap—rank by market cap as it best reflects actual trading volume. However, many platforms also display FDV for reference. On Gate’s token info page, both “Market Cap” and “Fully Diluted Valuation” are shown side-by-side. Both indicators should be considered for a complete view of market position and potential risks.

References & Further Reading

• https://www.coingecko.com/learn/what-is-fully-diluted-valuation-fdv-in-crypto
• https://coinledger.io/learn/what-is-fdv-crypto