Fully Diluted Valuation (FDV) is a financial metric used to gauge the total potential market capitalization of a cryptocurrency if all coins or tokens were to be issued. It is calculated by multiplying the max supply of tokens by the current price per token. For example, if a token is priced at $2 and its max supply is 1 billion tokens, its FDV would be $2 billion—even if only 100 million tokens are currently circulating.

The concept of FDV has become increasingly important in the cryptocurrency space, as it provides investors with a clearer picture of the long-term value of a project, especially when large numbers of tokens are locked, vested, or yet to be issued. The origin of FDV can be traced back to traditional finance, where similar metrics are used to evaluate the potential value of companies.

In the context of cryptocurrencies, FDV allows investors to assess the risk and potential return of their investments more effectively. It helps investors understand the potential impact of future token releases on price and market cap, especially in early-stage projects with low circulating supply. As the crypto market matures, understanding FDV has become crucial for making informed investment decisions.

FDV can vary based on the tokenomics of different projects. Common examples include:

FDV is calculated using the following formula:

This formula helps investors understand the potential market capitalization of a cryptocurrency project in the future. For example, if a cryptocurrency has a current price of $10 and a max supply of 1 million tokens, the FDV would be $10 million. This metric is particularly useful as it accounts for tokens that are not currently in circulation but will be released in the future.

Investors often use FDV in conjunction with other valuation metrics, such as Market Capitalization and Circulating Supply, to assess whether a cryptocurrency is overvalued or undervalued. A high FDV relative to the current market cap means that the market cap is currently undervalued, which could indicate that the project is poised for growth. At the same time, a low FDV compared to market capitalization is commonly interpreted as the market cap being overvalued, and it might suggest a lack of investor interest or potential issues with the project. It's worth remembering that FDV should be used with caution and in combination with other factors when evaluating a project's potential for growth.