What Is the Rationale for Using Fully Diluted Valuation (FDV) over Market Cap in Comps?
The rationale for using FDV over Market Cap (MC) in Comps is to ensure a fair, long-term comparison of projects by accounting for future token supply dilution. MC only reflects the current circulating supply, which can be artificially low for new projects with large unvested allocations.
FDV provides a more honest comparison of the total potential valuation, allowing investors to assess the dilution risk and compare projects on an equal footing regarding their ultimate size.
Glossar
Fully Diluted Valuation (FDV)
Valuation ⎊ Fully Diluted Valuation (FDV) represents the theoretical market capitalization of a cryptocurrency if all future tokens were currently in circulation.
Market Cap
Capitalization ⎊ The market capitalization, often abbreviated as market cap, represents the total dollar market value of a cryptocurrency, options contract, or financial derivative.
Cap
Strike ⎊ Cap, within cryptocurrency derivatives, denotes the predetermined price level at which an option contract ⎊ typically a call or put ⎊ may be exercised.
FDV
Valuation ⎊ Fully Diluted Valuation (FDV) represents the theoretical market capitalization of a cryptocurrency project if all tokens were currently in circulation.