Day 11 of 31 days crypto/defi terminologies challenge
FDV- Fully Diluted Valuation
During research or going through some Defi analysis tools, the word ''Fully Diluted Valuation/ Marketcap'' is usually attached to the details of a token or coin.
You might wonder what this means and how it helps my research course.
A thread 🧵
FDV — is a simple concept. It builds on the idea of market capitalization; for short, "Marketcap."
Market Capitalization- is the total value of all the coins that have been mined or is in circulation
It's calculated by multiplying the number of coins in circulation by the current market price of a single coin/token.
-Circulating supply: This is the number of coins or tokens that are publicly available to buy or sell.
If you can trade them, they are considered to be circulating.
Total supply: This is the total amount of coins or tokens of a specific cryptocurrency that have been created or mined in circulation, including those that are locked or reserved.
Take note:This doesn't include the burnt or destroyed.
Maximum supply- It is the maximum number of coins or tokens that will be created.
This means that once the maximum supply is reached, there won't be any new coins mined, minted, or produced in any other way.
-How do you calculate FDV and market cap if it wasn't given in a project or, instead, you want to do a confirmation test
Calculating FDV and marketcap is primary
It is done just by collecting two pieces of data:
FDV=Maximum supply × current market value of the token
Market cap=Circulating supply × market value of the token
For example, consider Bitcoin. Right now, there are roughly 18.9 million bitcoins in existence, but theoretically, up to 21 million Bitcoins could be mined. Bitcoin's price is $17500 as of the time of this thread.
Therefore, the fully diluted valuation would be roughly 367.5 billion. Ultimately, this FDV tells you what Bitcoin's market cap would be if all 21 million Bitcoins were in circulation.
- That's all for today.
- Kindly follow @0xTosyn for more educational contents.
#HappyNewYear2023 #31daysofdefiterms
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