Why market cap understates real supply
Market capitalization multiplies token price by circulating supply, but that figure ignores tokens locked in vesting schedules, team allocations, or treasury reserves. Fully diluted valuation (FDV) includes every token that will ever exist, showing what the market cap would be if all locked tokens hit the market simultaneously.
Investors ignore this gap at their peril. A project with 1M circulating tokens at $100 has a $100M market cap. But if 10M tokens vest over the next year, the true economic dilution is ~90%, and post-unlock price pressure could be severe.
Reading the unlock schedule
Token vesting tables are public for any serious project. Check the steepness of the unlock curve: a gentle slope over years feels manageable, but a cliff where 50% of supply unlocks in one quarter is a red flag for price crashes. Projects with extremely high FDV-to-mcap ratios often have this problem baked in.