What is Fully Diluted Market Cap?

The fully diluted market cap (also known as fully diluted market capitalization or FD Cap) is a metric used to calculate the total market value of a cryptocurrency if all of its coins or tokens were in circulation, considering all existing supply and any additional tokens that could be created in the future.

To calculate the fully diluted market cap, multiply the current token price by the maximum token supply. This represents a hypothetical scenario assuming all tokens are available for trading at their current price. The fully diluted market cap may differ greatly from the project's current market cap, which only considers tokens currently in circulation..

The fully diluted market cap is important for ICOs or token launches, where tokens may be held by the project team, reserved, or subject to vesting periods. It helps you to evaluate the project's potential value by considering the full token supply and distribution plans.

Fully diluted market cap provides insights into future dilution dynamics. It enables you to understand the potential impact of token releases on the overall market valuation. A high fully diluted market cap compared to the current market cap indicates a substantial number of tokens yet to enter the market. This could influence future supply-demand dynamics and the token's price.

Example Calculation: ABC Coin

To provide an example, let's consider a fictional cryptocurrency called ABC Coin. Currently, there are 10 million ABC Coins in circulation, and the price of each coin is $10. However, the project has plans to release an additional 5 million tokens through a token sale in the future.

To calculate the fully diluted market cap of ABC Coin, we would add the value of the existing circulating supply to the value of the additional tokens that could be created. In this case, it would be:

Fully Diluted Market Cap = (Total Supply + Additional Tokens) * Price per Token

= (10 million + 5 million) * $10

= 15 million * $10

= $150 million

Therefore, the fully diluted market cap of ABC Coin would be $150 million, considering the existing supply and the potential additional tokens that could be issued.

Caution in Interpreting Fully Diluted Market Cap

It is indeed important to approach the fully diluted market cap with caution. While it provides an estimation of the total market value if all tokens were in circulation, not all tokens included in the fully diluted market cap may actually be released or freely traded. Some tokens might be subject to restrictions, held by the project team, or never issued at all. Therefore, it's crucial to consider fully diluted market cap as a hypothetical estimate rather than a definite valuation.