What Is Fully Diluted Valuation?
Fully Diluted Valuation (FDV) is a token's current price multiplied by its maximum total supply — the theoretical market cap if every token that will ever exist were already in circulation. If a token trades at $5 with a max supply of 1 billion, the FDV is $5 billion, regardless of how many tokens are currently circulating.
How FDV Works
FDV reveals the true implied valuation of a project. A token might have a $200M market cap (based on circulating supply) but a $2B FDV (based on total supply). This means 90% of supply is locked and will eventually enter the market through vesting, emissions, or unlocks. Each unlock event dilutes existing holders.
Why It Matters for Traders
FDV is essential for avoiding valuation traps. Projects with low market cap but high FDV face massive supply headwinds — incoming tokens create persistent sell pressure. Comparing market cap to FDV (the MC/FDV ratio) reveals how much dilution risk exists. Ratios below 0.3 deserve scrutiny, as they indicate 70%+ of tokens are yet to unlock.
