Fully diluted valuation (FDV) refers to the total market capitalisation of a cryptocurrency if all possible tokens or coins were in circulation, calculated as the current token price multiplied by the total supply.
This metric considers not only the tokens currently in circulation, but also those that could be issued in the future through mechanisms like mining, staking, or vesting schedules. Essentially, FDV provides an estimate of the maximum potential market value of a cryptocurrency with a broader view of how the market could potentially value a project if all tokens were in circulation. It allows traders to compare the valuations of different projects, even if their circulating supplies significantly differ.
Formula:
FDV = Current Price of the Token × Maximum Supply of the Token
For example, if a token is currently priced at $10 and has a maximum supply of 100 million tokens, the FDV would be:
FDV = 10 × 100,000,000 = 1,000,000,000 USD
A high FDV relative to the current circulating market cap might indicate potential inflation and selling pressure as more tokens are released.
Note that, since FDV assumes that all tokens will eventually be released, it can sometimes be overly optimistic, especially if the token release schedule is long or uncertain. Additionally, it might not reflect the actual market cap if a significant portion of tokens is locked, vested, or unlikely to enter circulation in the near future.
