Filling up from the bottom: A new mechanism for allocating tokens
As we kick off 2025, we are excited to introduce a novel token allocation strategy for projects that we are calling Filling Up From the Bottom. We believe this mechanism promotes one of the most fair and egalitarian distribution of tokens inside a fixed-price sale. Filling up from the bottom maximizes the number of individual participants in a sale while still allowing for participants with more capital to express their demand.
How does it work?
You can think of Filling Up From the Bottom as sharing some characteristics of traditional pro-rata allocation but instead of favoring large capital allocators, it maximizes a fair distribution.
One way to visualize how the mechanism works is to think of the total amount of tokens allocated as a volume of water where a bar chart of all participants’ maximum purchase amounts is “filled up uniformly” using the available tokens.
Participants should make a purchase request with their largest maximum purchase amount - similar to any fixed-price sale on CoinList. Then during the allocation phase, purchases will be allocated by selecting for the minimum allocation across the most number of people and continuously “filling” the allocation up to each user's maximum purchase amount.
Let’s visualize this with an example.
Imagine a sale with $10,000 of total allocation available. Six users participated in the sale and the minimum purchase amount was $100. User 1 requested $1,200, User 2 requested $2,600, User 3 requested $3,500, User 4 requested $700, User 5 requested $5,000 and User 6 requested $900.
In the first round of allocations, across 6 participants and $10,000 sale, each user could receive a maximum of $1666.67 worth of tokens. Therefore any user with demand equal or below that number is allocated their full demand. This results in $2,800 of allocations secured and $7,200 remains available to 3 participants at $2,400 each. All of the remaining users have demand that exceeds $2,400 thus we have found the clearing price for all the remaining demand. Users 2, 3, and 5 all receive $2,400 tokens each.
The end result is that all users receive at least the minimum allocation (but up to their maximum) and unlike a pro-rata allocation no user will receive more allocation than any other user simply because they have more capital.
Projects are able to maximize their distribution among the largest cohort of participants while users can feel assured that they will receive some allocation and no user has any unfair advantage over them.
WalletConnect Community Round
WalletConnect is using this methodology for their Community Round. Their goal is to optimize for the largest number of participants. Instead of just capping the max purchase amount at an arbitrary, low number, we want to organize a sale structure that maximizes the number of participants while still allowing for participants with more capital to express their demand. We are excited about this new allocation strategy and anticipate many more projects will leverage this in the future.
Legal notice
Token sales are unavailable to residents in the U.S. (and its territories), Canada and certain other jurisdictions.
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