Market Capitalization vs Fully Diluted Valuation (FDV) Explained
How to evaluate crypto valuations accurately: calculating circulating supply, token lockups, venture capital cliff unlocks, and future dilution risks.
Step-by-Step Practical Instructions
3 Action StepsCirculating Market Capitalization (Current Value)
Market Cap = Spot Price × Circulating Supply. It reflects the total USD value of tokens currently available for public trading in the open market.
Fully Diluted Valuation (FDV - Total Theoretical Value)
FDV = Spot Price × Maximum Total Supply. It measures the theoretical valuation of a project if all locked and unminted tokens were in active circulation today.
Analyze Token Unlock Schedules
Review project vesting schedules on TokenUnlocks or DefiLlama to identify upcoming VC cliff unlocks that introduce massive sell pressure.
Frequently Asked Questions
Why can a token with a $1 price have a higher market cap than a $100 token?
Because market cap depends on total circulating coins. A token priced at $1 with 10 billion coins has a $10B market cap, whereas a token priced at $100 with only 10 million coins has a $1B market cap.
This guide is grounded in primary source documentation, cryptographic standards, and regulatory filings:
- Cryptocurrency Market Microstructure & Tokenomics Dilution Dynamics— National Bureau of Economic Research (NBER) (2021-07-01)
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