$ qubo learn fundamentals/05

Crypto fundamentals: supply, unlocks, FDV vs market cap

For a token, the equivalent of the share count is the supply. Circulating supply is what is in the market today. Max supply is the most that will ever exist, if a limit is set.

Market cap is price times circulating supply. Fully diluted valuation (FDV) is price times max supply. A large gap between the two means many tokens are still to be released.

Tokens held by teams and early investors are often released on a schedule called vesting, through unlocks. A large unlock increases circulating supply; whether holders sell is unknown in advance.

Supply can also shrink. Some protocols burn tokens, for example with part of their fees. Reading a token’s supply schedule is the crypto version of checking share dilution.

// rule to remember

// your turn

Open one crypto asset page and calculate the ratio of market cap to FDV.

Educational content only. Not investment advice. Past data does not predict future results. Risk disclosure