What is FDV (fully diluted valuation)?

An asset's price multiplied by its maximum eventual supply rather than by its circulating supply.

FDV is often far higher than market cap for newly launched tokens that still have large amounts locked. The gap between the two figures shows how much future supply is scheduled to be released, which is why reading them together tells you something neither says alone.

The mistake is treating fully diluted valuation as a price target or as evidence a token is expensive. It is neither. It is one number multiplied by another, and its usefulness is entirely in the ratio it forms with market capitalization.

How it works

The calculation is simple: current price multiplied by the maximum supply that will ever exist. What makes it slippery is the second input. Some tokens have a hard cap written into the contract. Others have no cap at all, in which case a fully diluted figure is either undefined or based on an assumption the data provider made and did not explain. Where a token's supply can be increased by governance, the figure is provisional at best.

The ratio of market capitalization to fully diluted valuation is the number worth reading. A ratio near 1 means almost everything that will exist already trades. A ratio of 0.1 means ten times the current float is still to arrive, through unlocks to insiders, emission schedule rewards, or both.

That matters because the price setting the fully diluted figure was discovered on a thin float. A small amount of buying can price a token that a much larger supply will eventually have to be sold into, and the market only finds out whether it can absorb that supply when the unlocks arrive.

Two tokens can have identical market capitalizations and completely different futures. The one with a low ratio has scheduled selling ahead of it that the other does not.

Example

Illustrative arithmetic. A token trades at $2. Circulating supply is 100 million, so market capitalization is $200 million. Maximum supply is 1 billion, so fully diluted valuation is $2 billion and the ratio is 0.10. For the price to hold once all supply is circulating, the market must support ten times its current capitalization. Compare a token trading at $2 with 900 million of a 1 billion supply already circulating: same price, ratio of 0.90, and almost no scheduled supply left to arrive.

Why it matters when you buy

A low ratio of market capitalization to fully diluted valuation tells you scheduled selling is ahead, and when it lands is knowable in advance rather than a matter of speculation. Check what is due at the unlock calendar, which coins carry the most near-term pressure at the unlock pressure ranking, and how much depth exists to absorb it at the liquidity pages.

Related terms

market cap — the circulating-supply counterpart, circulating supply — the denominator that matters now, float — what actually trades, unlock — how the gap closes, emission schedule — new supply arriving alongside, vesting cliff — where unlocks cluster.

Questions

Is a high FDV a reason not to buy?

On its own it says nothing, because it scales with price. What is informative is the ratio to market capitalization and the schedule behind it, which tells you how much supply is still to come and when.

Where does the maximum supply figure come from?

From the token contract where a cap exists, and from the project's documentation otherwise. Aggregators sometimes fill the gap with an estimate, so check the primary source before relying on it.

Can FDV be lower than market cap?

Not under a consistent definition, since maximum supply cannot be below circulating supply. A published figure showing that indicates a data error, usually a stale supply number.