## Investor Must-Read: How to Accurately Assess a Crypto Project’s True Value Using FDV Coins that seem cheap—why do you still lose money after buying? The issue might be that you’re overlooking a key metric—**FDV (Fully Diluted Valuation)**. This concept sounds complex, but it determines whether your valuation of a project is clear-headed. Today, we’ll guide you from an investor’s perspective to understand what FDV actually does. ### What is FDV? A straightforward definition Imagine you’re looking at a project with a market cap of only $250 million, making it seem "cheap." But if you know that this project will release 10 times the current tokens in the future, the real cost of this investment changes completely. **FDV (Fully Diluted Valuation) considers all the tokens that could possibly circulate in the future, estimating the total value of the project.** Its calculation is simple: **FDV = Total Supply × Current Token Price** Meanwhile, market cap only considers the circulating supply: **Market Cap = Circulating Supply × Current Token Price** The gap between these two numbers often reflects the project’s future risks and opportunities. ### Why must investors pay attention to FDV? Many projects do not release all tokens at once. They unlock tokens gradually through mechanisms like phased releases, staking mining, team allocations, etc., slowly bringing tokens to market. Take **XRP (Ripple)** as an example: it has a strict vesting schedule, ensuring tokens don’t suddenly flood the market. As of the latest data, XRP’s total supply is about 99.986 billion, but only 60.491 billion are in circulation, with a current price of $1.89. This means nearly 40% of tokens are not yet circulating—this potential sell pressure is already factored into FDV. **If in the future a large amount of tokens are unlocked, causing supply to surge, even if the project’s fundamentals remain unchanged, the token price could be diluted.** That’s why FDV can better reflect your true investment risk than market cap. ### FDV vs Market Cap: Practical Comparison Let’s look at concrete numbers. Using **BTC (Bitcoin)** as an example: - Current Price: $85,930 - Circulating Supply: 19.96 million - Max Supply: 21 million - **Market Cap**: $1,715.33B - **FDV**: $1,715.33B Why does BTC’s market cap equal FDV? Because Bitcoin is nearing full circulation, with little room for new supply. This project has no significant token dilution risk. Now consider **NEXO (Nexo)**: - Current Price: $0.91 - Circulating Supply: 1 billion - **Market Cap**: $911.70M - **FDV**: $911.70M NEXO’s case is similar: circulating supply equals total supply, so market cap and FDV are the same. These projects are relatively "clear"—no hidden token bombs. ### Key scenarios: Four combinations of Market Cap and FDV Investors should watch out for: **Low Market Cap, High FDV** — the project appears cheap now, but a large amount of tokens may unlock in the future - Could be a "hidden gem," but also a sign of upcoming token dilution - Requires in-depth research into the token issuance schedule **High Market Cap, Low FDV** — the project is expensive now, but growth potential is limited - Might be fully priced in or overhyped - Limited room for upside **Low Market Cap, Low FDV** — both current and future outlooks are not optimistic - Could be a new project or an old project in trouble - High risk **High Market Cap, High FDV** — the project is currently recognized, with a promising outlook - Many mature projects like Bitcoin and Ethereum fall into this category - But high FDV also indicates a higher valuation, so caution is needed ### Using FDV alone can be risky: Risks you need to understand Here’s a reality check: **FDV is not a perfect evaluation tool.** First, FDV assumes all future tokens will circulate at the current price, but in reality, token prices fluctuate. When a large amount of new tokens are unlocked, increased supply can depress prices, diluting your returns. Second, FDV is just a static figure; it doesn’t account for the actual schedule of token unlocks. A project releasing 50% of tokens this year versus over 10 years poses very different risks. Third, factors like market competition, regulation, project progress, etc., influence a project’s true value, but FDV does not reflect these aspects. ### Correct Approach to Investment Decisions Don’t rely solely on FDV. When making investment decisions, also consider: - **Token issuance schedule** — When will how many tokens be unlocked? - **Market depth** — How big is the gap between FDV and market cap? - **Project fundamentals** — Technology progress, ecosystem development, community activity - **Team and funding** — Funding adequacy, core team stability - **Competitive landscape** — The project’s position within its sector **In short, FDV is a useful metric, but it needs to be combined with other tools for a comprehensive assessment.** It helps identify projects with hidden token dilution risks but cannot replace thorough fundamental research. By comparing FDV and market cap, along with your outlook on the project’s future, you can avoid buying coins that are "unreasonably cheap."