Supply, unlocks and dilution: the maths that decides most outcomes

More money has been lost to supply schedules than to hacks. The information is public, published in advance, and most buyers never look at it.

Two numbers, and the gap between them

Market capitalisation is the price multiplied by the tokens in circulation right now. Fully diluted valuation, or FDV, is the price multiplied by every token that will ever exist.

The gap between them is future supply that does not exist yet but will. It is not a theoretical concern. It is a scheduled, dated, publicly documented increase in the number of units competing for the same demand.

How vesting actually works

• Cliff: a period where nothing unlocks at all. A twelve month cliff means zero for a year, then a large tranche all at once. That single date frequently marks a visible break in the chart.
• Linear vesting: a steady drip after the cliff, often monthly over two to four years. Constant, predictable sell pressure that is easy to underestimate because no single day looks dramatic.
• Emissions: new tokens minted continuously to pay liquidity providers or stakers. Separate from vesting and often much larger. A protocol paying forty percent annual yield in its own token is diluting holders by roughly that amount to fund it.
• Treasury releases: discretionary sales by the project to fund operations. Usually less predictable and sometimes disclosed only afterwards.

The low float, high FDV pattern

A pattern that became standard practice and deserves to be understood as a structure rather than an accident.

1. A project raises private capital at a low valuation from funds and insiders.
2. It launches publicly with a very small percentage of supply circulating, often three to eight percent.
3. Thin float means small buying moves the price a long way, so the launch chart looks spectacular.
4. That price applied to total supply produces a headline FDV of billions, which the marketing then cites as validation.
5. Public buyers enter at that valuation. Insiders hold the other ninety plus percent, acquired far lower.
6. Unlocks begin. Supply arrives continuously into a market whose enthusiastic buyers have already bought.

How to check, in five minutes

1. Find circulating supply and total supply. Any major data aggregator lists both, as does the project's own documentation.
2. Calculate circulating divided by total. Below twenty percent means most of the supply is still to come.
3. Find the unlock schedule. Search the token name with "unlock schedule" or "vesting", or read the tokenomics section of the documentation.
4. Identify the next twelve months of unlocks as a percentage of current circulating supply. Over fifty percent is a serious headwind.
5. Check the emissions rate separately. Yields paid in the native token are dilution and are frequently omitted from unlock charts.
6. Ask the question that matters: what has to be true for demand to absorb all of that at this price?

When a high FDV is defensible

It can be. A protocol with real, growing revenue, whose unlocks are years out and gradual, whose token captures a share of that revenue, may reasonably trade at a high FDV. The point is never that a large gap is automatically fatal. It is that the gap is a debt that demand must service, and you should know the size of the payment before you lend.

Common questions

What is fully diluted valuation in crypto?

The current price multiplied by every token that will ever exist. The gap between FDV and market cap is future supply that will arrive on a published schedule and must be absorbed by new demand.

What does low float high FDV mean?

A launch where only a few percent of supply circulates, so a small amount of buying produces a spectacular chart and a huge headline valuation, while insiders hold the rest and unlock into public buyers over the following years.

Is high APY in a project's own token real income?

Largely no. Newly minted tokens distributed proportionally leave your ownership share roughly unchanged. The return only materialises on selling, and widespread selling is what suppresses the price.