Imagine walking into your local bank branch to make a deposit, but instead of a private slip, you have to shout your account balance and transaction details to everyone standing in the lobby. It sounds absurd, yet that is exactly how most public blockchains work today. Transparency is the golden rule, meaning anyone with an internet connection can see exactly what is moving where. While this is great for trust, it is terrible for privacy. If you are a business trying to pay suppliers or a trader trying to protect a strategy, that radical transparency becomes a liability. We have been waiting for a way to keep the books open without showing everyone the receipts.
- Zama is selling 12% of its total token supply.
- Auction runs from January 21 to January 24.
- Floor price is set at $0.005 per token.
Zama, a company focused on fixing this exact problem, is launching a new sale of its digital tokens. But this is not just a standard fundraising event. Zama is using the sale itself to prove that its technology actually works. They are selling 12% of their total token supply through a complex auction system that runs directly on the blockchain.
The Secret Auction
The event is structured as a “sealed-bid Dutch auction.” If that sounds like a mouthful, think of it like a silent auction at a charity dinner, but with a mathematical twist. In a normal auction, you shout your price, and everyone tries to outbid you. In a sealed-bid auction, you write your price on a piece of paper and put it in a box. Nobody knows what you bid until the end.
This specific auction will run from January 21 to January 24. Zama is partnering with CoinList, a well-known platform for launching new crypto projects, but they are also letting people bid directly through Zama’s own app. The goal is to sell the tokens to the highest bidders, but with a fair pricing mechanism. Everyone who bids high enough to win will pay the same price—specifically, the lowest price that clears the inventory. It is a bit like a group discount for the winners.
The floor price—the absolute minimum the tokens will sell for—is set at $0.005 per token. If you do the math on their total supply, that puts the minimum value of the network at $55 million. However, considering Zama’s company equity was recently valued at over $1 billion, the final price will likely end up much higher than that floor.
Doing Math in a Locked Box
The real story here isn’t the price; it’s the technology running the show. Zama uses something called Fully Homomorphic Encryption, or FHE. This is one of those terms that makes eyes glaze over, so let’s break it down.
Usually, if you want a computer to process data—like adding numbers or sorting a list—you have to decrypt the data first. It’s like having a secret document in a safe. To read it or edit it, you have to open the safe. While the safe is open, the secret is vulnerable.
FHE is different. It allows the computer to do the math while the data is still encrypted. Imagine a magician who can shuffle a deck of cards and arrange them in order while they are still locked inside a steel box. The computer processes the “ciphertext” (the scrambled nonsense) and produces a result that, when decrypted later, is the correct answer.
In this auction, the blockchain acts like a shared Google Doc that everyone can read, but nobody can secretly edit. The bids are recorded there, but because of FHE, the amounts are encrypted. The blockchain verifies the auction is fair without ever revealing who bid what. As Zama puts it, this prevents participants from seeing each other’s positions.
“For too long, the ‘public’ nature of blockchains has meant a total sacrifice of privacy, forcing users to choose between transparency and confidentiality. By running this sale fully onchain using Zama’s FHE technology, we are proving that you can have both.”
That was Rand Hindi, the CEO and co-founder of Zama. He believes this proves you don’t have to choose between privacy and the security of a public ledger.
A Shift for CoinList
This sale also marks a significant change for CoinList. Historically, CoinList has operated like a traditional bank or a coat check. You give them your money (or your coat), they hold onto it, and they give it back or send it where you tell them. This is called “custodial” service.
For the Zama sale, CoinList is moving to a “non-custodial” model. This is more like a self-service parking lot. You keep your keys—your private keys, which are like the physical key to a safe deposit box. If you lose them, nobody can help you, but it also means nobody can freeze your funds. Users will interact directly with the smart contracts (the software running the deal) rather than letting CoinList do it for them.
“Most sales [historically] leveraged our custodial infrastructure. We collected all the funds on behalf of the projects and investors in our custody system. In this new paradigm, investors are participating directly onchain.”
Scott Keto, the president of CoinList, noted that they plan to do all future sales this way. It puts more responsibility on the user, but it aligns better with the ethos of crypto, which is all about cutting out the middleman.
Why Do This?
You might wonder why Zama is selling tokens at all. They have already raised over $150 million from big investors like Pantera and Multicoin. They aren’t exactly hurting for cash. According to Hindi, this isn’t a capital raise; it’s a distribution mechanism.
Think of a new country printing its own currency. If the government keeps all the cash in a vault, the economy can’t function. They need to get the currency into the hands of citizens so they can start buying bread and paying taxes. Zama needs “citizens”—users and validators—to hold the token so the network can run.
“It’s technically not a raise. It’s a sale to users and validators, so more like a distribution mechanism to seed the token holder base.”
Once people have the tokens, they can use them immediately. In the Zama network, tokens are used to pay for “gas fees.” Gas fees are like paying a toll on a busy highway; you pay a small amount to the network to process your transaction. The tokens can also be “staked,” which is similar to putting money in a Certificate of Deposit (CD) at a bank. You lock your funds up to help secure the network, and in return, you earn rewards.
Avoiding the Gas Wars
One final benefit of this sealed-bid structure is that it prevents “gas wars.” In popular token sales, thousands of people often try to buy at the exact same second. It creates a digital traffic jam. People start offering to pay higher and higher tolls (gas fees) to get their transaction through first. It’s chaotic and expensive.
By using a sealed-bid auction that lasts for days, there is no rush. You can place your bid on Tuesday morning or Wednesday night. It removes the time pressure. It also stops “front-running,” where sophisticated bots see your transaction waiting in line and jump ahead of you to buy the tokens first, driving up the price.
If this experiment works, Zama plans to let other projects use their auction infrastructure. It could change how digital assets are sold, moving us away from the frantic, public shouting matches of the past toward something quieter, private, and perhaps a little more civilized.
