Zama Launching Token Sale at $55 Million Floor FDV via CoinList and Own Auction App

Privacy protocol Zama is launching an onchain token sale with a $55 million fully diluted valuation (FDV) floor via CoinList and its own auction app according to The Block. The sale will distribute 12% of the total 11 billion ZAMA token supply using a sealed-bid Dutch auction structure as reported. Zama aims to provide both transparency and privacy by utilizing its fully homomorphic encryption technology according to Zama.

The main auction, allocated for 8% of the token supply, will run from Jan. 21 to Jan. 24 via CoinList. Participants will be able to claim tokens on Feb. 2 as stated. The sale is also open for bids through Zama's own auction app, offering users flexibility beyond the CoinList platform according to The Block.

The token sale is structured into three components, according to Zama co-founder and CEO Rand Hindi. A 2% community sale for Zama's NFT holders is scheduled this week, followed by an 8% sealed-bid Dutch auction and a final 2% post-auction sale as detailed. This approach aims to limit front-running and gas wars by removing visibility into other participants' bids according to Zama.

Why Did This Happen?

Zama is seeking to use this token sale as a distribution mechanism rather than a capital raise. Hindi stated that Zama's mainnet is already live, and the token will be immediately usable upon distribution according to The Block. The company has previously raised over $150 million from investors, including Multicoin, Pantera, and Protocol Labs, with its most recent funding round valuing the company at over $1 billion on an equity basis as reported.

The token sale also serves as a live use case of Zama's fully homomorphic encryption technology. This encryption allows computation on encrypted data, ensuring bid quantities remain confidential while maintaining onchain auditability according to Zama.

How Did Markets React?

The Zama auction is CoinList's first fully onchain, non-custodial token sale. This shift reflects CoinList's broader strategy to move away from custodial infrastructure to direct onchain participation as reported. CoinList's president, Scott Keto, emphasized that this approach empowers investors to interact directly with project smart contracts, which will be the company's standard going forward according to The Block.

The sealed-bid structure is designed to remove time pressure and reduce the risk of last-minute sniping. While there is no upper bound on the final FDV, higher clearing prices would require proportionally larger capital commitments, according to Zama.

What Are Analysts Watching Next?

Zama has stated that if the auction proves successful, it plans to open its auction infrastructure to other projects seeking similar onchain distribution models as reported. This could signal a shift in how token sales are conducted, with increased focus on privacy and transparency.

Investors are closely watching the clearing price and the distribution of tokens. The auction has a floor price of $0.005 per token, implying a $55 million FDV based on ZAMA's total supply according to The Block. The outcome of this auction could influence future token sales on the Ethereum mainnet and other blockchain platforms.

Zama's approach to token distribution also aligns with the growing demand for privacy in blockchain applications. The company's technology aims to address the long-standing issue of sacrificing privacy for transparency in public blockchains according to Zama.

The token sale is expected to be a test of market confidence in Zama's protocol and its ability to deliver on its privacy promises. As the auction date approaches, investors and analysts will be monitoring bid patterns and the final clearing price for signs of market sentiment.