What Is Fully Diluted Valuation (FDV)?

Fully diluted valuation is current price multiplied by maximum supply rather than circulating supply. It answers a question market cap cannot: what is this project valued at once every token that will ever exist has been released?

The gap between the two numbers is the single most useful thing to check before buying a newly launched token. A project with a $50 million market cap and a $2 billion FDV has 97.5% of its supply still locked — in team allocations, investor vesting schedules, ecosystem funds and future emissions. Every one of those tokens eventually enters circulation, and the people receiving them typically acquired them far below the current price.

The consequence is mechanical rather than speculative. Even with genuinely growing demand, a steady stream of new supply hitting the market suppresses price. Buyers of the small circulating float are absorbing sell pressure from unlock recipients for months or years. Charts of heavily-diluted tokens through their vesting periods tend to look remarkably similar, and not in a way that favours early buyers.

Check three things before committing: the ratio of market cap to FDV, the vesting schedule (when do unlocks happen and how large), and who holds the locked supply. A 1:1 ratio means supply is fully distributed and this risk does not apply. A 1:40 ratio means you are early to a token whose float is about to multiply.

FDV is not a valuation verdict on its own — a project can deserve a high FDV. It is a warning that the supply picture you see today is not the one you will be holding into.