What Is Fully Diluted Valuation (FDV)?

Fully Diluted Valuation (FDV) is the theoretical market cap of a token calculated by multiplying the current token price by the maximum total supply of tokens that will ever exist. It shows what the token's market cap would be if every single token—including those still locked in vesting schedules, team allocations, and future emissions—were already circulating.

For airdrop farmers, FDV matters because it reveals the real size of a protocol's token economy. When Arbitrum airdropped ARB tokens in 2023, the token started at around $1.20. With 42.8M tokens maximum supply, the FDV was roughly $51 billion. But only ~387M tokens were actually in circulation at launch—the circulating supply was much lower. This gap between FDV and actual circulating market cap tells you how much token dilution is coming as vesting schedules unlock.

Why FDV Matters for Airdrop Farming: Token price can be artificially inflated if most tokens are locked away. A protocol might appear cheap based on circulating supply but actually have massive dilution risk. Hyperliquid's airdrop created initial hype around the token price, but farmers who analyzed the FDV could see the vesting schedule would release millions of tokens over time. This dilution pressure directly impacts your airdrop's real value.

The relationship between circulating supply and FDV is critical. If a token has 100M circulating supply and 1B max supply, that's 10x potential dilution. Each time tokens unlock from vesting (often happening over 2-4 years), the circulating supply increases, which puts downward pressure on price unless demand grows equally. Jito's token launch showed this dynamic clearly—early holders profited, but those who bought after vesting accelerated lost money as dilution accelerated.

Red flags: Protocols with FDV far higher than circulating market cap (10x+ gap) signal aggressive vesting schedules ahead. This is especially relevant for retroactive airdrops—the tokens you farm today might be worth significantly less in 6-12 months when team and investor allocations vest. Always compare FDV to circulating market cap before considering an airdrop farming opportunity valuable.