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25 May, 2024

Fully Diluted Value (FDV)

[ Fu-ly dai-loo-tihd va-loo-ay-shn ]

FDV is a metric that calculates a cryptocurrency project’s total value by multiplying the total token supply by its current price.

Suchet Dhindsa Salvesen
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Suchet Salvesen
Suchet Dhindsa Salvesen Suchet Salvesen Expert Author
Suchet is a Norwegian economist, entrepreneur, and investor, serving as the CFO and COO of Brainfund. With over a decade of experience in global expansion, venture capital, and emerging technologies, he earned his MBA from the NMBU School of Business & Economics. He held dual bachelor's degrees from the University of South-Eastern Norway. His career...
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Massimo, a seasoned entrepreneur, and CEO of SIGNVM Group, has an impressive 6-year history in the Web3, Crypto, and Blockchain space. His key achievements include founding a pioneering VR/AR studio in Paris and serving as Huobi Global's Business Development Director and Country Director in France. Massimo excelled at building strong partnerships with top exchanges like...

What Is Fully Diluted Valuation?

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Fully Diluted Valuation (FDV) is a financial term that represents the total value of a cryptocurrency project, assuming all its tokens have been released into circulation.

This means that the FDV provides a broader valuation of the project, including not only tokens in circulation (which can be bought) but also those in reserves or unreleased. 

Investors use this metric to evaluate the project’s future potential, similar to how a publicly-listed company would be valued by the total number of issuable shares on the market. 

“Fully Diluted Valuation (FDV) is a commonly used metric to assess the total worth of a project. While most projects release tokens gradually over time, FDV calculates the project’s value by assuming all tokens are unlocked at the current price.”

Jung M.

A Short Overview of FDV History

Before crypto, the FDV definition was used for the stock market. Investors apply this metric to assess a company’s total value, assuming all securities are converted to common shares. 

In that case, the FDV represents a company’s maximum market value. For example, if a company has 100,000 common shares and 20,000 stock options, the total number of available shares would be 120,000. 

In that case, the FDV of that company, considering the price of a share is $20, would be $2.4M. However, let’s turn back to FDV’s meaning in crypto. 

How to Calculate Fully Diluted Valuation?

Fully Diluted Valuation of Worldcoin
Fully Diluted Valuation of Worldcoin | Source: Coingecko

To calculate the FDV, multiply the total number of project tokens by the current price of the token. This differs from the circulating supply as not all the tokens are circulating in the market yet. 

For larger projects, the total supply is usually displayed on data aggregators like Coinmarketcap or Coingecko. Investors look at the tokenomics for smaller projects, which is often displayed in the whitepaper. 

One interesting example of what FDV is in crypto is Worldcoin. Considering the current price of $5.11, Worldcoin’s market capitalization is $1.1B, as the project has only issued 214M WLD on the open market. However, its FDV is over $50B, making investors more confident in the project’s future value. 

Comparing Fully Diluted Value and Market Cap

FDV and market capitalization (market cap) are important metrics for evaluating crypto projects. Yet, they serve different purposes and reflect different aspects of a project’s value. That’s why investors shouldn’t think about FDV vs. market cap but how to use both terms to assess potential.  

The market capitalization offers a snapshot of the project’s current valuation, while the FDV projects what the valuation could be, assuming the total token supply is in circulation. 

The math is also different. To calculate the market capitalization, investors should multiply the number of tokens in circulation by the current token price. For FDV, the current price should be multiplied by the total token supply. 

Due to this distinction, young projects often have a larger FDV with a smaller market cap—they didn’t have the time to unlock a large portion of their tokens. Older projects, however, have similar market capitalization and FDV values, as a major chunk of their tokens is released. 

Exploring the Limitations of FDV In Cryptocurrency

Using the FDV terms means a project’s tokens will be released and reach the market at the current price, which is highly unlikely. 

Even a small token unlock can cause major price fluctuations (sell pressure), resulting in a lower actual value. The FDV also does not consider the vesting schedules or lock-up periods that delay the actual availability of tokens in the market. 

FDV can also be misleading for projects with large portions of their tokens locked away or reserved for future use. Including those in the calculation might paint an overly optimistic picture, ignoring the potential market impact of releasing a substantial number of tokens. 

Lastly, FDV doesn’t reflect the current market environment or project performance, making it less reliable for short-term investment decisions. It is a theoretical figure that needs to be contextualized with real use cases, project development, and tokenomics. 

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Suchet Dhindsa Salvesen
Written by

Suchet is a Norwegian economist, entrepreneur, and investor, serving as the CFO and COO of Brainfund. With over a decade of experience in global expansion, venture capital, and emerging technologies, he earned his MBA from the NMBU School of Business & Economics. He held dual bachelor’s degrees from the University of South-Eastern Norway. His career spans roles at NextToMe, Get, and Conax before joining Everipedia, now Brainfund, in 2017.

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