Low float, high FDV (Fully Diluted Value) tokens
The issue behind low float, high FDV (Fully Diluted Value) tokens stems from the disparity between the circulating supply and the total potential supply. These tokens have a low float, meaning only a small portion of their total supply is available for trading, while the high FDV reflects a large fully diluted market capitalization based on the total supply.
The key problems include:
Limited liquidity: The low float results in fewer tokens available for trading, leading to high price volatility and difficulty in price discovery.
Downward pressure: As more tokens are unlocked over time, early investors or project teams may sell, pushing prices down.
Inflated valuations: High FDV often leads to inflated token valuations, leaving little upside for retail investors, as much of the growth potential is already priced in at the token's launch.
Examples of low float, high FDV tokens include Bittensor (TAO) and Autonolas (OLAS), which have a significant portion of their supply locked up, making them part of this trend.
More examples of low float, high FDV tokens include:
Worldcoin (WLD): It has a particularly low float, with only 2% of its total supply in circulation at launch, leading to extreme price volatility and investor concerns.
Filecoin (FIL) and Internet Computer (ICP): Both launched with extremely low floats relative to their total supply, contributing to rapid price declines post-launch.
Cheelee (CHEEL): Another low float token, it has a market cap to FDV ratio of just 0.04, signaling that most of its supply is locked.