CoinEx: Exchanges must fully play their role to help users avoid the "FDV dilemma"

On May 22, 2024, a discussion titled "Ethereum ETF vs. High FDV Dilemma: What is the Future Market Trend?" initiated by CoinEx on X (CoinEx Global) attracted a lot of attention.cryptocurrencyThe news attracted the attention of investors and quickly spread among some communities.cryptocurrencyRecently, topics such as "Ethereum ETF", "high FDV dilemma", "high market value and low circulation" and "VC projects" have attracted great attention and discussion from investors. As of press time, the attention to this incident is still growing.

In the discussion led by CoinEx, the panelists agreed that the market has high expectations for the approval of the Ethereum ETF, but are unsure when it will be approved, tomorrow or in the short term.

WoShy @bc1qWorkShy 认为近期以太币价格的飙升引证了这个预期，并补充说历史上每一次SEC对加密资产的决定都对cryptocurrency的长期价格产生了重大影响。

VIP3@web3VIP said that former US President Trump’s recognition of cryptocurrency is a support for the cryptocurrency market, and the impact on the price of Ethereum and even other cryptocurrencies may double in the future.

About High FDV: Questions and Discussions

FDV, that is (Fully Diluted Valuation).TokenThe fully diluted value is the market value obtained by multiplying the current coin price by the circulation volume. In the rising cycle of the industry, most investors will regard high FDV as an important investment indicator. Among the many discussions, a major point of disagreement is that some people believe that since the current circulation volume of most VC projects is only one-tenth of the total circulation volume or even lower,TokenThe fully diluted valuation has already become a bubble. In the short term, high FDV has no practical reference value. Investors who rely on high FDV as a consideration for investment decisions will only fall flat on their faces. This is undoubtedly a major investment trap for new investors.

The opposing side believes that this is entirely determined by the supply and demand relationship in the market and cannot be considered as intervention. In particular, the phenomenon of a series of VC projects being cut in half due to the sluggish market some time ago was caused by insufficient industry liquidity. Moreover, industrial development tends to be specialized, and the logic and standards of "two-price discovery" (price and value discovery) related to investment discovery are also changing. We cannot simply blame the problem on the high FDV of the project with a fixed mindset and perspective.

It is true that the crypto industry is developing in a positive direction, and incremental growth is a necessary consideration. With the unremitting efforts of many evangelists and pioneers in and outside the industry, the BTC ETF was successfully passed, bringing continuous incremental growth to the industry, pushing the overall market value of global cryptocurrencies to $2.6T, of which the market value of Bitcoin is 1.37T, ranking ninth in the global asset ranking (according to companiesmarketcap.com data). The subsequent passage of the Ethereum ETF is bound to attract more incremental growth - not only incremental funds, but also incremental investors/users. So, how to avoid the trap of high FDV has become a strong demand of many new investors and even some industry veterans.

Avoid the high FDV dilemma.exchangeProject selection is key

There is no doubt that ETFs are bound to attract incremental users and incremental funds, while the "high FDV dilemma" will eventually lead to a reduction in the stock. The increase and decrease are not conducive to the normalization, scale and sustainable development trend of the cryptocurrency industry in the long run. To solve the high FDV dilemma, we need to understand why VC projects tend to have the setting of "low circulation, high valuation": because under the established market demand, due to the scarcity of market liquidity in the short term, the lower circulation of project tokens is more conducive to the setting of token prices. Three roles have to be discussed here: exchanges, new users and VCs. We know that professional traders/investors have their own complete investment philosophy, which is naturally excluded from this topic. The VC's setting of "low circulation, high FDV" for project tokens is mainly to have a higher pricing power at the beginning of the token launch in order to better achieve the goal of pushing up FDV. Therefore, the key role that can truly solve the "high FDV dilemma" of new users can only beexchange.

As a global leading crypto asset trading platform dedicated to making cryptocurrency trading easier, CoinEx believes that only by continuously focusing on polishing products and services, improving user experience, and insisting on continuously launching high-quality assets for users to meet their diversified investment needs can we serve more crypto asset users. In this process, project selection is a key, and the exchange must play its full role to allow more investors to avoid the "high FDV dilemma". CoinEx has been continuously optimizing project selection criteria and gradually formed a set of currency listing mechanisms based on "good, fast, and complete", and focusing on discovering and paying attention to those innovative and high-quality projects with low valuations and high growth, which have won the favor of investors (especially new investors).

As TMJ, a guest at the X Space event hosted by CoinEx, said: “The value of all high-quality projects will eventually be discovered. All they need is time.” Let us wait and see the future of the crypto asset industry.

About CoinEx

Founded in December 2017, CoinEx has always adhered to the brand concept of "user first" and provided currency-to-currency trading, perpetualcontract, leveraged trading, pledged lending and strategy trading and other products and services. With its user-driven market orientation, rich and diverse product functions and continuous improvement of product services, CoinEx has become an exchange that supports 1,000+ currencies, 1,500+ trading pairs, and serves more than 5 million users in more than 200 countries and regions around the world, providing them with simple, intuitive, professional and stable crypto asset trading services, escorting their crypto journey.

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