Get Newton
The Canadian crypto trading platform you can trust.
Sign up now
Clarity around token supply is a great jumping-off point when evaluating the performance and analytics of blockchain projects. Tokenomics are central to how value is created and sustained within a network. Bitcoin gave us a blueprint for this, with its capped issuance of 21 million coins, embedding scarcity into the very premise of its design. This fixed limit has become a reference for how other protocols approach creation, inflation, and how these factors are considered when evaluating a project's fundamentals.
Numerous tokens have emerged since Bitcoin's launch, each with its own distribution schedule and incentives. The sheer number of projects makes it more challenging to assess long-term value. One tokenomics metric that helps provide context is Fully Diluted Value (FDV).
FDV reflects the total value of a token based on its maximum supply, priced at the current market rate and includes coins not yet in circulation but expected to be released over time. Understanding FDV can provide insight into potential dilution, inflationary pressure, and how token supply schedules may interact with broader market dynamics. FDV may also allow for better comparisons between different projects with similar tokenomics, helping users evaluate which projects offer the best value.
Many chains launch with capitalization tables that allocate tokens to founders, developers, or ecosystem funds intended to support future development, often through mechanisms like inflation-based funding. When users look at market capitalization, a common metric available on apps and trading platforms, they are typically seeing only the circulating supply. This can make it easy to overlook future token unlocks that may have an impact on supply and, as a result, valuation.
Market capitalization is calculated by multiplying the current token price by the number of tokens in circulation.
Fully Diluted Value uses the same price but multiplies it by the maximum possible supply, including tokens that are locked, reserved, or not yet released.
A large gap between market cap and FDV may indicate a significant portion of tokens are yet to be released, which could result in future supply increases. For example, a token with a $100 million market cap and a $500 million FDV may have 80 percent of its supply still to enter circulation, which could affect price and investor confidence over time.
In some networks, especially those governed by on-chain voting or “code is law” models, token supply rules can be changed through community consensus. This means new tokens can be minted or supply schedules adjusted, which may affect FDV calculations over time. Understanding how flexible a protocol’s monetary policy is can be an important part of evaluating its long-term value.
FDV offers a helpful snapshot, but it’s only part of the bigger picture. Here are some other key metrics we’ll be covering in upcoming Learn articles:
Circulating Supply Growth: How token emissions can impact projects
Token Release Schedules: Understanding cliffs, unlocks, and vesting
Total Value Locked (TVL): A look at activity in DeFi ecosystems
Trading Volume and Liquidity: Why depth matters for stability
Developer Activity: Tracking on-chain innovation and updates
Community Participation: How governance, forums, and social traction influence project direction
Market Sentiment: Measures the forces that can shift markets sometimes even faster than fundamentals
Given the high volatility of cryptocurrencies, understanding metrics like FDV is helpful in evaluating a project's overall health and potential risks.
To explore these topics further, visit our blog, where each concept will be covered in upcoming Newton articles.
_%20What%E2%80%99s%20Driving%20Crypto%20Adoption_.jpg)
