Both numbers are the token price multiplied by a supply figure. They differ in which supply they use.
The definitions
- Market cap = price x circulating supply. Circulating supply is the amount that can be traded today.
- Fully diluted value (FDV) = price x maximum supply. It assumes all tokens, including locked and not-yet-released ones, exist at today's price.
Why the gap matters
Many projects release tokens over time to the team, investors and the community. If only a tenth of the supply circulates, the market cap is a tenth of the FDV. Every future unlock adds supply, and unless demand grows as fast, the price faces pressure.
How to use it
- Compare FDV with market cap. A ratio near one means most supply is already out. A large ratio means most of it is still to come.
- Read the unlock schedule if one is published, and check who receives the tokens.
- Use FDV when comparing with other projects, since it puts them on equal footing.
- Remember some tokens have no maximum supply. FDV may then be unknown or misleading.