Is There a Relationship Between Fully Diluted Value & Price?

VyFinance Tokenomics

4 min readNov 20, 2023

There has been a lot of discussion regarding the tokenomic outline for $VYFI, and how this is affecting the price action of our token. We want to discuss this in some detail, to further elucidate the differences between Fully Diluted Value (FDV), Market Cap; and their relationship to token price through inflation. Warning, there is maths ahead! If you want to skip it, jump to: What does all this have to do with VYFI?

Useful Concepts

Let’s introduce a few simple but important concepts that will help us discuss tokenomics:

What is Market Capitalization (Market Cap)?

Market Cap is the total value of a project’s tokens that are available on the market. This value is a derivation of the tokens price, and can be calculated directly using:

What is Fully Diluted Value (FDV)?

FDV is a crypto specific concept. It represents the market capitalization of all the tokens that will ever exist for a project (known as the Maximum Token Supply — Tmax). FDV can also be calculated directly using the following formula:

What is inflation?

Inflation is the rate at which tokens are being released to the market. The inflation rate is a measure of the change in token supply over a period of time, with respect to the Token Supply. It is easiest to think of on an annualized basis. The inflation rate can be calculated directly using:

Relationship between Market Cap, Price, and FDV

We can see an example of the relationship between Market Cap and Total Token Supply given a price in Img.1 . We can see that the relationship between Market Cap and Total Token Supply is linear. The dotted lines represent the maximum possible Market Cap, or FDV. This is the point at which Market Cap and FDV converge.

Img 1. An example of the relationship between Market Cap and Token supply, given a token price of 0.5, 1, and 1.5. We have used the VYFI maximum supply as the value for FDV, which is 450,000,000, and the market cap at FDV is represented by the dotted line for each price.

Table of Symbols

Is there a relationship between FDV and Current Price?

What does all this have to do with VYFI?

We have decided to implement a unique design for our tokenomics. Rather than trying to build value through the restriction of Maximum Token Supply, we are accomplishing this through a restricted rate of emissions.

The current emissions rate for VYFI is 8,900,000 Tokens per year (as of 10/26/2023). This gives us an annualized inflation rate of 8,900,000/450,000,000 = 1.98% per year. Given that our Maximum Total Supply for VYFI is 450,000,000 tokens, we won’t reach our FDV for at least another 40 years. Given this slow rate of inflation, particularly for a DEx token, the FDV isn’t a current determinant on the value of $VYFI. Rather, the largest determinant of any tokens price is the Market Cap — not the Fully Diluted Value.

We have chosen to implement this design due to the relationship described above: “Market Cap approaches the Fully Diluted Value, given that Circulating Token Supply is approaching Maximum Token Supply”. As we have implemented a very slow emissions rate against our Maximum Token Supply, the FDV will not be approached for a significant amount of time. This allows for three major advantages:

1) We have a long lasting token supply for Farmers to use as rewards (currently 40+ years)
2) We have the capacity to adjust our emissions without greatly affecting our total rewards

3) We can take advantage of a low inflation rate to drive value to the project and maintain emissions within reasonable levels

It is important to be aware that the time limit for $VYFIs’ Market Cap to reach the FDV is over 40 years, and as such is a poor determinant of project value, and thus token value — as it is wholly unrepresentative of the current state of the $VYFI market, which is principally determined by Market Cap.


Governance will have the capacity to adjust all of these “settings” so to speak once launched. An example of this would be the governance could, if they want to make changes to the Maximum Total Supply (Tmax), conduct a burning of tokens. It is important to note that a burn of tokens reduces the runway for Farm, but these discussions can be had in detail with the community.


To conclude, the rate of inflation for VYFI is very low, <2% per year. This means it will be many years (40+ given current emissions rate) until the Market Cap reaches the Fully Diluted Value. As such, the FDV is a poor measure of our current market value, which is far more closely represented by our Market Cap instead. Consideration should be given to the rate of inflation, not just the FDV of any given project. All the information on our emissions can be found here, (our current rate of emissions is half of what’s described):