## Understanding Token Supply: Why FDV Matters More Than You Think

When evaluating any crypto project, most investors fixate on market cap. But here's what they miss: market cap only reflects the value of tokens currently in circulation. This is where fully diluted valuation (FDV) enters the picture as a critical lens for deeper analysis.

### What Exactly Is FDV in Crypto?

Fully diluted valuation represents what a cryptocurrency's total market value would be if every single token that could ever exist were already trading today. The math is straightforward: multiply the current token price by the maximum total supply. This forward-looking metric reveals the true scope of a project's potential size.

### The Real Risk Hidden in FDV

The disparity between FDV and market cap tells an important story. When you see a crypto project with substantial FDV but only a fraction of tokens circulating, you're looking at future dilution risk. As those locked or unvested tokens gradually enter the market, selling pressure typically increases—which can weigh on price regardless of market sentiment.

This is particularly important for newer projects or those still in early stages of token distribution. A token that seems reasonably valued at its current market cap might face significant headwinds as supply expands toward its maximum.

### Evaluating Tokenomics Through the FDV Lens

FDV becomes invaluable when assessing a project's long-term sustainability. By comparing current price against maximum supply scenarios, you can evaluate whether the economics make sense. Does the project's roadmap and adoption potential justify the fully diluted valuation? Or does the gap between current market cap and FDV suggest aggressive token unlocking ahead?

This metric works best alongside tokenomics analysis—understanding not just the size of total supply, but the release schedule and vesting mechanisms that control when new tokens flood the market.

### Market Cap vs. FDV: Why Both Matter

Current market cap tells you today's value. FDV tells you what tomorrow might bring. Smart investors use both metrics together: market cap shows present liquidity and real economic activity, while FDV provides early warning signs about future price dynamics tied to token inflation.