What Is Market Cap?

Market cap is the total dollar value of a token in circulation, calculated as: current token price × circulating supply. If Arbitrum trades at $2 and has 175M circulating tokens, its market cap is roughly $350M.

Why this matters for airdrop farming: Market cap tells you the actual size and liquidity of an airdrop token you're farming for. A protocol with a $50M market cap will have vastly different token economics than one worth $5B. When you farm airdrops from protocols like Uniswap (historically a $6B+ market cap token) versus emerging Layer 2s, market cap reflects the project's maturity and how diluted your airdrop allocation will feel relative to total supply.

Market cap is not the same as fully diluted valuation (FDV). FDV includes all tokens that will eventually exist (including locked team allocations, unvested tokens, and future emissions). Jito's market cap might be $500M, but its FDV could be $2B if vast amounts of tokens are locked in vesting schedules. This difference is critical: an airdrop from a project with high FDV relative to market cap signals heavy token unlock pressure ahead, which typically suppresses price after you claim.

Use market cap to contextualize your airdrop opportunity. A token with $100M market cap has different risk/reward than a $10B one. Lower market cap projects are riskier but offer higher upside potential if adoption succeeds. Check market cap against TVL (total value locked) and trading volume to spot red flags—if a protocol has $1B TVL but only $50M market cap, it's severely undervalued OR headed for a rug pull.