What is FDV? The role of Fully Diluted Valuation in Crypto Assets.

When browsing any token list on Gate.io, you will see two market cap figures: "Circulating Supply" and FDV. Curious newcomers will immediately ask, "What is FDV?" or "What is FDV in cryptocurrency?" Fully Diluted Valuation (sometimes referred to as Fully Diluted Market Cap) estimates what the market capitalization of a token would be if every token defined in the tokenomics were in circulation. Understanding FDV is crucial for identifying overvaluations, seizing airdrop unlocking opportunities, and managing the risks of early-stage projects.

Why Market Capitalization Is Not Everything

Market capitalization = Price × Current tradable token supply. When only 5-10% of the total supply is unlocked, this number may seem small. A token with an issuance price of $1 and a circulating supply of 50 million has a market cap of exactly $50 million. But if its total supply is 1 billion, then the FDV is $1 billion, with a potential difference of up to 20 times. A high FDV relative to the circulating supply often indicates that when the established token eventually lands on exchanges like Gate.io, it will face selling pressure.

How to Calculate FDV

FDV = Current token price × Maximum token supply

example

The trading price of token X is $2.40 Max Supply = 500 million FDV = 2.40 × 500 million = 1.2 billion USD The Gate will automatically display this value next to each spot trading pair, so users do not need to calculate the numbers.

The Role of FDV in Tokenomics Analysis

• Unlocking Plan – Projects release tokens either linearly or in a cliff manner; converting these future released tokens into the impact on FDV helps investors assess their dilution.
• Venture Capital Exit Window - If the venture capital fund holds 30% of the supply that will be unlocked in the next quarter, a high FDV indicates that the market will experience aggressive distribution.
• Price target reality check - a meme coin shouting "to $10!" might imply a multi-trillion dollar FDV - this is unlikely to be achieved without global adoption.

Compare FDV of Different Sectors

| Industry | Typical circulation percentage of TGE | FDV alert threshold | | ------------ | ------------ | ------------ | | Level 1 | 8–15% | >200 billion USD | | DeFi | 12–25% | >50 billion USD | | GameFi | 5–10% | >20 billion USD | | Meme/Culture | 100% (Unlocked) | N/A (All supply is active) |

A Layer-1 issuance project with a 10% floating amount and a $30 billion FDV requires years of sustained demand to justify its initial price.

FDV and Actual Valuation: Case Study

ARB ( Arbitrum ) – Launched in March 2023 at a price of $1.20, with a circulating supply of 12.75%. FDV is approximately $12 billion. The price stagnated until the first unlock in March 2024, after which the price dropped by 30% as new supply impacted the market makers on Gate. PYTH – Airdrop in November 2023, with a floating amount of 15% and an FDV of approximately $5 billion. Positive ecosystem incentives keep it elevated, but when the weekly issuance volume doubles in the second quarter of 2024, the token was sold off by 45%. Lesson: A large FDV alone does not indicate a bearish scenario—unless the unlocking speed is faster than the actual demand growth rate.

How Traders Use FDV on Gate

• Pre-Listing Research - Compare FDV with peer tokens before participating in Gate's startup; avoid inflated trading.
• Unlock Calendar Hedging – If the FDV is already high, use Gate futures to short tokens facing significant unlocks.
• Long high circulation gems - Tokens with nearly 100% circulation like DOGE or KAS can eliminate dilution risk; FDV ≈ Circulating supply limit.

Practical Checklist for Using FDV (DYOR)

1. Read the simplified version of the tokenomics white paper - pay attention to the cliff and linear timeline.

2. Convert the upcoming unlocked tokens into potential FDV based on the current price.

3. Check the funding rate panel of Gate; a high positive funding rate for low liquidity tokens indicates that the leverage is too high.

4. Adjust the position size to ensure that 30% of the unlocked amount will not liquidate your margin account.

5. Reassess FDV every quarter - the market is changing, and so is the fair value.

Conclusion

Fully Diluted Valuation answered a hidden question: "What happens when the remaining tokens enter the market?" By understanding what FDV is—and tracking it alongside the circulating supply cap—you can avoid overpaying due to hype and discover true value before the masses. Gate transparently displays the circulating supply, maximum supply, and FDV, enabling traders to make data-driven decisions in the fast-paced world of cryptocurrency.

Author: Cinnie, Gate.io researcher Translator: Sherry S. *This article only represents the author's views and does not constitute any trading advice. Investment carries risks, and users should make careful decisions. *This content is original and copyrighted by Gate.io. If reprinting is required, please indicate the author and source, otherwise legal responsibility will be pursued.