Market Cap Vs Fully Diluted Valuation

The comparison between market capitalization and fully diluted valuation (FDV) is essential for understanding the total potential value of a token relative to its current circulating supply. Market cap reflects the value of tokens currently in circulation, while FDV accounts for the value of all tokens that will ever exist, including those locked or yet to be minted.

A large discrepancy between the two suggests significant future supply inflation, which can be a red flag for long-term investors. This metric helps in normalizing the valuation of different projects that may have vastly different tokenomics.

It is a standard tool in fundamental analysis to ensure that investors are not misled by a low circulating supply that masks a high total valuation. Evaluating both numbers is necessary for a realistic assessment of a project's worth.