If a token has a market cap of $1 billion, is it really worth only $1 billion?
When looking at crypto projects, two figures are often confused.
One is circulating market cap, and the other is fully diluted valuation (FDV).
Suppose a token is priced at $10, with 10 million tokens currently in circulation and a total supply of 100 million.
Its circulating market cap is $100 million.
Its FDV, based on the total supply, is $1 billion.
The two figures differ by a factor of 10. That doesn’t mean the price is bound to fall tenfold, but it does remind you that a large number of tokens have yet to enter circulation.
When analyzing a project, you should look beyond the price and understand its supply, unlock schedule, actual demand, and token allocation.
The market won’t automatically offer you tokens at a bargain just because a number looks cheap.
#Cryptocurrency #TokenEconomics #Crypto #Tokenomics
When looking at crypto projects, two figures are often confused.
One is circulating market cap, and the other is fully diluted valuation (FDV).
Suppose a token is priced at $10, with 10 million tokens currently in circulation and a total supply of 100 million.
Its circulating market cap is $100 million.
Its FDV, based on the total supply, is $1 billion.
The two figures differ by a factor of 10. That doesn’t mean the price is bound to fall tenfold, but it does remind you that a large number of tokens have yet to enter circulation.
When analyzing a project, you should look beyond the price and understand its supply, unlock schedule, actual demand, and token allocation.
The market won’t automatically offer you tokens at a bargain just because a number looks cheap.
#Cryptocurrency #TokenEconomics #Crypto #Tokenomics