Fully Diluted Valuation (FDV) Beginner’s Guide
FDV Estimate a project’s value if all tokens were tradable, using the current token price and maximum supply. It is useful for assessing potential dilution and supply pressure, but cannot alone represent a project’s actual or future value.
FDV meaning and calculation
Fully diluted valuation is used to estimate the market value of a project after all its tokens enter circulation, calculated at the current price. The formula is “current token price × maximum supply.” For example, when the unit price is 5 USD, and the maximum supply is 100000000 tokens,FDV is 500000000 USD。
FDV versus market capitalization
Market capitalization only calculates the tokens currently available for trading, while FDV estimates the value after all tokens are released based on the maximum supply. If a token has a circulating supply of 10000000 tokens and a unit price of 5 USD, its market capitalization is 50000000 USD; when the maximum supply is 100000000 tokens,FDV is 500000000 USD。
How to understand the difference between the two
Market capitalization and FDV differ significantly, usually indicating that many tokens have yet to enter circulation. When analyzing this, examine when and how locked tokens will be released, because large short-term unlocks may substantially increase supply pressure. Also assess whether user growth, token utility, and demand can absorb the additional supply.
Limitations and how to use it
FDV Assume that the price remains unchanged after additional tokens are released, but in reality, prices change with supply, demand, and market volatility, so this is not a forecast of the future price. When evaluating a project, also consider market capitalization, tokenomics, trading volume, adoption, the team’s background, and the project roadmap to avoid relying on a single metric.
Original Tutorial
https://www.binance.com/zh-CN/academy/glossary/fully-diluted-valuation-fdv
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