I read an interesting discussion today on Telegram. Private investors were discussing the relevance of FDV (Fully Diluted Valuation) when considering buying a crypto.
Here are the messages:
User1:
I thought that [Alephium](https://exploreer.xyz/alephium/) has a decent risk-reward ratio, but then I looked and found that it’s a low float, super high FDV project—$168m market cap and $1.84b fully diluted. Disgusting.
User2:
It doesn’t make any sense to take FDV into account for a PoW chain, lmao.
Come on, Valentin, you’re better than this.
User1:
I saw one of your comments where you said it’s your main bag.
With the recent criticism of low float, high FDV, it’s going to be a hard sell when people see a $20 billion FDV at a 10x pump from here. So, maybe the coin tracking pages will need to adjust some of the stats.
Apart from that, I see that the circulating supply and total supply are in a similar ratio to Taraxa, with the max supply making it look ridiculous.
User2:
The low float, high FDV concerns projects that launch at some really high valuation for the market cap (thus the FDV) while having some « big » vesting in the coming months.
There is, right now, a big problem in the VC industry where large VCs are looking to deploy their capital and therefore need projects with high valuations to fully optimize their allocation.
So you end up with projects such as Layer-0 (ZRO) or Starknet valued at $1bn when they launch, despite having no revenue or adoption at all.
This doesn’t really apply to Alephium or any PoW, in any case. It’s a completely different situation.
And FDV is a meme anyway, even more so for PoW.
What may matter is how much the supply will change within your investment time horizon—6 months, 1 year, 18 months. But even here, it’s really tricky.
Kaspa’s supply increased by 70% over the first 15 months—and it’s during this period of time that it printed the bigger X’s.
You could argue that Taraxa has somehow better tokenomics than Alephium, Kaspa, and Tonchain—yet those 3 have been outperforming the L1 pack while Taraxa has been mildly performing.
User1:
lol, so many triggered Alephium holders.
Anyway, talk with CMC and CoinGecko to do something with those stats because a $20 billion FDV at 10x from here, considering how negatively low float/high FDV is perceived, will turn into a psychological barrier to buying. Even I fell for these stats, instead of doing a more in-depth check. 🙂
Leaving Alephium aside, FDV was never a meme. It was a lie spread by the VCs to help retain or stimulate more exit liquidity.
User2:
FDV has always been a meme because it’s clear that smart money doesn’t hold assets for the long term.
No matter the dilution of the supply, altcoins (and BTC) will get wrecked during the bear market.
Considering the low float-high FDV just gives you a false sense of safety.
There are many criteria for investment, and it’s all about weighing them.
If you give « FDV » too much importance, you literally faded some of the best performers in 2023-2024—Solana, Near, Ton.
User3:
FDV is definitely a meme in a full-blown bull run.
What is FDV anyway?
FDV, or Fully Diluted Valuation, in crypto refers to the total market value of a cryptocurrency if all possible tokens were in circulation. It’s calculated by multiplying the current token price by the maximum supply of tokens. FDV provides a perspective on a project’s potential market cap, assuming all tokens are issued, helping investors assess long-term value and compare projects more accurately.
My take on this: yes, FDV is kinda meme
I don’t think FDV really matters for « legit » projects. Most of the time, the tokenomics are designed with wrong intention. If there is a big difference between the current market cap and the FDV, it’s probably because it will take many years or even decades to reach full dilution.
I prefer to focus on other metrics such as adoption and growth!
