Fully Diluted Valuation (FDV) is an important indicator in assessing the value of a cryptocurrency project. FDV not only reflects the current market value of a project but also calculates the maximum potential value of that project.

Please follow the article of AZcoin to get an overview of FDV in the crypto market.

What is Fully Diluted Valuation (FDV)?

Fully Diluted Valuation (FDV) is a finance and cryptocurrency industry term for the total market value of an asset if all issuable tokens, coins, or shares were in circulation. This is a way to measure the maximum value of a project when all potential financial means have been realized and circulated.

How calculate Fully Diluted Valuation

To calculate Fully Diluted Valuation, you need to multiply the total maximum number of tokens the project can issue by the price of each token. 

For example, if the project can issue a maximum of 1 million tokens and the price of each token is $10, then the FDV will be $10 million.

Advantages and disadvantages of Fully Diluted Valuation (FDV)

Fully Diluted Valuation (FDV) has the following advantages and disadvantages:

Advantages

🍍 Holistic evaluation: FDV allows investors and analysts to evaluate the maximum value a project can achieve when all tokens, coins or issueable shares have been circulated. This helps provide an overall and comprehensive view of the project's value.

🍍 Easy comparison: Compared to Market Cap (market capitalization), FDV provides a number based on the assumption that all tokens will be issued. This helps investors easily compare the value of different projects in the same industry.

🍍 Details: The FDV calculation process requires a clear determination of the current number of tokens and possible future tokens, providing detailed and complete information about the capital structure of the project.

Disadvantages

🍪 No reflect reality: FDV often remains theoretical and does not reflect reality because not all potential tokens or shares may actually be issued and circulated. This can lead to overestimation of a project's value.

🍪 Vulnerable to bias: Without accurate information about the number and value of tokens that have not yet been issued and are intended for future purposes, FDV calculations can lead to inaccurate results.

🍪 Can be manipulated: Since FDV is based on predictions about the number of tokens that will be issued in the future, it can be manipulated by project developers or large token holders.

The difference between FDV and Market Cap

Although both FDV and Market Cap are used to evaluate the value of a cryptocurrency project, they differ in the following ways:

🐦 Measurement unit: Market Cap represents the value of all tokens that have been issued and are currently traded, whereas FDV calculates the potential market value of a project.

🐦 Symmetry: FDV is symmetric, meaning its value remains unchanged regardless of buying or selling tokens, whereas Market Cap fluctuates with token prices.

🐦 Time factor: Market Cap can change over time due to fluctuations in token prices. In contrast, FDV doesn’t change over time as it computes the maximum potential value of the project.

How to use FDV to evaluate a crypto project?

To use FDV for evaluating a crypto project, you should consider factors alongside FDV, such as:

✨ The number of tokens already issued and the total token supply in the market.

✨ The price of each token.

✨ Other projects in the same sector or industry as the project under evaluation.

✨ The current cryptocurrency market conditions.

✨ Information about the project's future token issuance plans.

From there, you can gain an overall understanding of the project's value and decide whether to invest or not.

Factors influencing FDV

FDV can be influenced by various factors, including:

🎀 Number of tokens issued: This includes both tokens already in circulation and tokens reserved for future purposes. This information is typically found in the project's whitepaper or on cryptocurrency data tracking platforms like CoinMarketCap, CoinGecko.

🎀 Price of each token: The price per token is a critical factor influencing FDV. When the price of a token increases, FDV also increases. However, it's important to note that token prices can fluctuate due to various factors such as market volatility, positive or negative news about the project.

🎀 Future token issuance: If the project plans to issue more tokens in the future, this quantity will also impact FDV. Issuing additional tokens increases the total supply in the market, thereby increasing the FDV.

🎀 Market conditions: The cryptocurrency market is constantly fluctuating and volatile, which also affects the FDV of a project. Significant market fluctuations can impact FDV, causing it to fluctuate up or down.

>> You may be interested in:

️️✍️ https://portfolium.com/entry/what-is-satoshi-satoshi-development-history

️️✍️ https://www.noteflight.com/profile/81f7ea68384a4bcfb10b30c99d7410e2a7dd1574

Conclusion

The above is an overview of Fully Diluted Valuation (FDV), an important tool in assessing the maximum value of a project or asset in the cryptocurrency market. Hopefully this information will help you better understand how to calculate and factors that affect FDV when researching and investing in crypto projects."