#Memerally Educational Post

What Is FDV in Crypto?

FDV stands for Fully Diluted Valuation. It’s a metric that tells us what a cryptocurrency project’s market value could be if all its tokens were available for trading right now. To find FDV, you multiply the current token price by the maximum supply of tokens the project can ever have.

For example, if a token costs $5 and the project has a max supply of 100 million tokens, its FDV is $500 million. FDV gives a "big picture" view of the project’s maximum potential value.

Why Does FDV Matter?

FDV helps you understand how a project’s value might change in the future as more tokens are released. Tokens are often locked up or released slowly over time, like through staking rewards or vesting schedules for team members.

For investors, FDV is like a sneak peek into what might happen down the road. If the FDV seems too high compared to what the project offers, it might signal potential risks, such as future token dilution lowering its price.

FDV vs. Market Cap

While both FDV and market capitalization involve the token price, they measure different things:

Market cap: Focuses only on tokens currently available for trading.

FDV: A metric that simulates the value of a project if every token that can exist is released.

For example, a project with 10 million tokens in circulation at $5 each has a market cap of $50 million. But if its max supply is 100 million tokens, the FDV would be $500 million. A big gap between market cap and FDV suggests that there are still a lot of tokens locked up, which might flood the market in the future.