Fully Diluted Value (FDV) Definition
The Fully Diluted Value, or FDV, of a cryptocurrency refers to the project’s market capitalization if all the tokens or coins that are to be issued or minted in future are included in the current circulating supply.
Fully Diluted Value (FDV) Key Points
- FDV provides a valuation of a cryptocurrency considering all tokens that will ever exist.
- It’s crucial for investors to understand the FDV because it provides a realistic picture of a cryptocurrency’s potential market capitalization.
- The FDV is dynamic and can change as coins are minted or burned, affecting the total supply.
- FDV is not the actual market cap but an estimation of what the market cap could be when all tokens are in circulation.
What is Fully Diluted Value (FDV)?
FDV gives a glimpse into the future by offering a theoretical market cap of a cryptocurrency, should all the potential coins be launched into the market. It’s a predictive measure where the current price of the token is multiplied by the total number of coins, including those yet to be released or those that can potentially be minted.
Why is Fully Diluted Value (FDV) Important?
FDV is of significant importance for investors as it offers an understanding of a project or cryptocurrency’s valuation, with all tokens accounted. It can influence investment decisions, by providing potential insights into future currency dilution and examining the perceived value of the coin.
When is Fully Diluted Value (FDV) Used?
FDV is often used when cryptos have a large portion of their supply locked up or yet to be minted. It’s a standard measure for many DeFi projects where token releases are scheduled across an extended timeline.
Who Uses Fully Diluted Value (FDV)?
Investors, traders, and market analysts typically use FDV as it provides a comprehensive view of the currency’s potential market value. It is a tool that can help identify undervalued or overvalued currencies, aiding strategic investment decisions.
How is Fully Diluted Value (FDV) Calculated?
FDV is calculated by multiplying a cryptocurrency’s current price by its maximum supply – this includes the coins that are currently in circulation, and those to be minted or released in the future. Keep in mind, FDV is theoretical because it makes assumptions about the future market conditions, which are, in actuality, unpredictable.
