Recently, when analyzing project valuations, I found that many people are still a bit confused about the concept of FDV. Actually, understanding what FDV means is quite important for judging whether a crypto project is worth investing in.

Simply put, FDV is the value of a project assuming all tokens are in circulation. It might sound a bit abstract, so let me give you an example. For instance, if you see a project with a low market cap but a ridiculously high FDV, you should be cautious, because there might be a large amount of tokens to be released in the future, which could dilute your holdings.

I recently looked at some data in the market. Bitcoin's current situation is quite representative: the current price is $77,710, with a total supply of over 20.01 million coins, and a circulating market cap of about $1.556 trillion. So, what does its FDV mean? It’s roughly $1.555 trillion. Bitcoin’s case shows both market cap and FDV are very high, indicating the project is quite mature.

But compare that to a project like NEXO, and it’s different. NEXO’s current circulating market cap is about $878 million, but the circulating supply has already reached 1 billion tokens. Its FDV is also about $878 million, which means almost all tokens are already in circulation, and there’s not much room for dilution in the future.

I think a common mistake many people make is seeing a low market cap and thinking they’ve found a bargain. But if you don’t look at FDV, you can’t really see the true valuation risk. For an extreme example, suppose a project has a market cap of only $10 million, which seems super cheap, but its FDV is $10 billion—that implies a 99-fold dilution in the future. At that point, you need to ask yourself, what justifies this project maintaining a high valuation after all tokens are released?

Another easily overlooked point is that FDV calculations assume token prices stay the same, but in reality, that’s not the case. When a large number of new tokens enter the market, the increased supply usually puts downward pressure on the price. So sometimes FDV can give you an overly optimistic estimate of a project’s potential value.

My advice is, when evaluating a project, don’t just focus on either market cap or FDV alone. You should look at them together. Also, pay attention to the token unlock schedule to see when large amounts of tokens will be released. Additionally, consider the project’s technological progress and market competitiveness—these substantive factors matter. Relying solely on FDV to judge whether to invest carries significant risks.

Finally, I want to say that understanding the concept of FDV is essentially about helping you see the true valuation space of a project. Whether for investment or trading, spending more time grasping these basic indicators is worthwhile in the long run.