What is Fully Diluted Value (FDV)?

FDV offers insights into the potential future market capitalization of a cryptocurrency by considering all possible tokens, providing investors with a comprehensive understanding of its long-term potential.

Oct 30, 2024 at 11:51 pm

What is Fully Diluted Value (FDV)?

Fully Diluted Value (FDV) is a metric used to represent the market capitalization of a cryptocurrency if all of its potential tokens were in circulation. It considers the total number of tokens that could exist, including those that haven't been minted yet.

How is FDV Calculated?

FDV is calculated as follows:

FDV = Current circulating supply * Price per token * Total maximum supply

Significance of FDV

FDV provides insights into the potential future market capitalization of a cryptocurrency if it were to release all its intended tokens. This metric is particularly relevant for investors who want to understand the long-term growth potential of a token.

Limitations of FDV

It's important to note that FDV can be highly speculative, as it relies on the assumption that all potential tokens will eventually be released. In reality, factors such as project abandonment or changes in token issuance plans can affect the actual market capitalization.

Example

Let's say a cryptocurrency has a current circulating supply of 100 million tokens, a price of $10 per token, and a total maximum supply of 200 million tokens.

FDV = 100 million * $10 * 200 million = $2 billion

This means that if all 200 million tokens were released, the market capitalization of this cryptocurrency would potentially reach $2 billion.