CWC Newsletter #55 (May 23, 2022)

By Taylor Ryker, Partner

EOS and Fully Diluted Valuation (FDV) Metrics

Have you been seeing the acronym "FDV" around Crypto Twitter? Or heard of the term "Fully Diluted Valuation" and wondered, what is that? Why should I even care about this?

Well first, let's define the term FDV, or "Fully Diluted Valuation", which describes the total market capitalization if all tokens are in circulation. A high FDV relative to market cap may lead to significant supply inflation and sell-side pressure. This is due to the fact that the circulation of tokens tends to be less than the total supply.

For the majority of crypto tokens in the market, the circulation of a particular token is less than the overall total supply of the token. For example, for EOS:

How does the circulation of the token impact the FDV of the token?

To find the FDV of the token for EOS, you would multiply the value of the token (currently $1.31) with the total supply. So the fully diluted value of EOS, or in this case "Fully Diluted Market Cap" would be:

During crypto bull markets in the past, the term FDV was met with rolled-eyes and memes because when times were good, investors and holders did not care about FDV.

But now that the crypto markets are becoming more bearish, it seems that Crypto Twitter is now more invested in the impacts and ramifications of FDV with specific tokens. Take for example, the FDV and market cap of popular tokens such as Avalanche (AVAX) and Solana (SOL):

In the tweet above, Trimbot explains the importance of FDV for Solana and Avalanche. With about half of the token supply of Avalanche and Solana out of circulation, Trimbot is concerned that during a market downturn, the insiders who control these tokens will probably offload them on the public markets, which would hurt the token value price.

To hammer the message home to his twitter followers, popular crypto influencer Ryan Selkis tweeted:

So what is the FDV of EOS? The current FDV (or Fully Diluted Market Cap) of EOS is:

For EOS, 92% of EOS tokens are in circulation:

With a healthy FDV, EOS also has a robust token distribution. In other words, there are no large whales that own/control more than 6% of the network with the token widely distributed across many token holders.

The token distribution, circulation, & decentralization of EOS is one of the best in crypto.

In relation to the other major crypto tokens, EOS is also a widely distributed token that does not have concentration of insider ownership; with B1 reducing their holdings from 10% to 6% of the total supply. Ryan Watkins details the importance of this concentration in regards to token distribution of the total supply of the major crypto tokens:

In conclusion, EOS's metrics in regards to FDV, circulation vs. total supply, and insider concentration of tokens all point to the fact that the EOS token distribution is healthy, decentralized, and resilient. With a growing crypto ecosystem that is seeing more tokens launched with a large portion of tokens going to insiders, VCs, and community allocations, investors and users need to become more aware of these metrics in choosing which platforms to interact with & invest in.

Disclaimer: Taylor Ryker is neither a financial nor legal advisor and holds the digital tokens or cryptocurrencies represented in the content above. This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this post constitutes a solicitation, recommendation, endorsement, or offer by myself to buy or sell any securities, commodities, cryptocurrencies, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities and commodities laws of such jurisdiction. The opinions expressed in this publication are those of the author. They do not purport to reflect the opinions or views of any of the author’s employers.