Dutch auction sales differ from traditional CoinList token sales in that the Dutch auction allows the market to set the final token price. The auction process allows tokens to be allocated in an equal and impartial way as all successful bidders pay the same price per token.
How do Dutch auctions work?
A Dutch auction is a decreasing price auction featuring a single seller and multiple buyers who determine the final clearing price. The final clearing price of the auction is the highest price at which the entire allocation can be sold. Economists describe Dutch auctions as a particularly fair distribution mechanism because every successful participant buys tokens at the same price, and all participants collectively determine that price.
In a Dutch auction, the seller sets an initial price per token (e.g. $10), and then units are sold beginning from the highest bidder downward until the auction “clears.” Participants place bids for the number of tokens they would like to purchase and the maximum price per token that they are willing to pay. As the auction price declines, bids placed at a price above the current auction price will be accepted in the order that they were received until (a) current demand meets or exceeds supply or (b) the reserve price is met, and the auction clears.
Auction Process
CoinList auctions occur in four phases: verification, bidding, pricing, and settlement.
- KYC verification. Purchasers must first be verified through CoinList’s onboarding process. Verified Purchasers can access the auction dashboard and place a bid on CoinList.
- Bidding. All Verified Purchases can submit bids through the auction dashboard. Purchasers are required to identify the price per token they are willing to pay and the total number of tokens and deposit the total bid amount. Purchasers are able to place early bids prior to the live auction, these bids will not affect the starting price. The highest price bidders (or the earliest, if purchasers submit at the same price) get priority on the tokens, which are then allocated in order from highest to lowest bid, until all tokens are sold. Purchasers are allowed to modify, withdraw, and re-enter their bids at any time prior to their acceptance, which is when the auction price meets the submitted bid price.
- Pricing: The bidding process generates a clearing price for tokens offered in the auction. The clearing price is the highest price at which tokens offered could be sold to all purchasers, based on bids in the order book that have not been withdrawn or rejected at the time of auction close.
- Settlement: Once the token price is determined, all investors who submitted successful bids receive an allocation of tokens at the clearing price. Settlement usually occurs within 10 days of the close of the auction. Post settlement, buyers may have leftover funds in their auction account — from partially-filled or rejected bids — which will be returned to their CoinList wallets.
How to Bid
In order to place a bid, participants are required to deposit their intended bid amount denominated in USD or USDC into a CoinList Wallet. To access wallets and deposit funds, participants must have a verified CoinList account. Note that the verification process can take up to 3 days.
To fund your Wallet, simply click “deposit” from inside your designated crypto or USD wallet. To learn more about using our wallets, click here.
Users have the option to deposit funds in USD, USDC, ETH or BTC. Processing time for USD wire transfers takes 3–5 days to appear in your account, while USDC can be deposited and used to bid during the live auction. To participate using ETH or BTC, upon registration click ‘Fund Wallets’ and enter in your total desired ETH or BTC denominated bid amount, which we will then convert to USDC.
To place a bid into the auction (this includes early bidding):
- Enter the total amount you would like to bid denominated in USD, ETH or BTC
- Enter your desired bid price per token
- Review the potential number of tokens you’ll receive at your desired price, and submit your bid
Participants’ deposited bids are securely held in their wallets, during which time transfers are locked until the settlement of the auction.
To learn more about upcoming CoinList auctions, click here. (https://coinlist.co/auctions)
Legal Disclaimer
This post is being distributed by Amalgamated Token Services Inc., dba CoinList. CoinList operates CoinList Services LLC (“CLS”), a technology company that offers compliance and technology infrastructure solutions for token issuers, and CoinList Markets LLC (“CLM”), a licensed money services business (NMLS #1785867). Neither CoinList, CLM nor CLS conducts investment diligence on token issuers or any tokens or token-based securities listed in this post nor provides legal, investment, banking, broker-dealer or tax services. Nothing in this post shall constitute or be construed as an offering of securities or as investment advice, tax advice or investment recommendations (i.e., recommendations as to whether to enter or not to enter into any transaction involving any specific interest or interests) by CoinList, CLM, CLS or any of their affiliates.
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