CoinMarketLabTwo numbers sit next to almost every token on a price page: market cap and fully diluted valuation. They answer different questions, and mixing them up is one of the cheapest ways to overpay for a token.
The definitions
Market cap is the current price multiplied by the circulating supply, the tokens that can trade today. Fully diluted valuation (FDV) is the current price multiplied by the maximum supply, including tokens that are locked, vesting or not yet minted.
Why the gap matters
If a token has a market cap of $200M and an FDV of $2B, only about 10% of supply is circulating. The other 90% will reach the market over time through team, investor and ecosystem unlocks. Every unlock is potential sell pressure, and the market has to absorb it with new demand.
Using the MC/FDV ratio
- Above 0.7: most supply is already out. Dilution risk is lower, but upside from scarcity is smaller.
- Between 0.3 and 0.7: moderate dilution ahead. Check the unlock calendar.
- Below 0.3: heavy dilution ahead. The token must grow demand several times over just to hold its price.
What the ratio does not tell you
A low ratio is not automatically bad. A young network with strong fee revenue can grow into its FDV. A high ratio is not automatically safe: a token with no demand stays weak with full circulation. Always read the ratio with the unlock schedule, fee revenue and who holds the locked tokens.
A quick checklist
- Find the circulating and max supply from the project docs, not only from aggregators.
- Open the vesting schedule and note the next three large unlocks.
- Compare MC/FDV with similar projects, not with the whole market.
- Ask who receives each unlock and whether they have sold before.
This article is education, not financial advice.