Even if you don’t plan to participate in the
@refihub sale on
@craftsdev, it’s worth watching how it plays out.
Crypto has a bad reputation for inflated FDVs.
With a sealed-bid auction, FDV is discovered by the market, not arbitrarily set by the team.
Basically ICO on Crafts works like this:
The clearing price (final sale price) is the lowest price at which the full token allocation can be sold.
-> Let’s say the ICO allocation is 1,000 tokens.
We need to find the price at which those 1,000 tokens can clear.
Investors submit bids:
A bids for 200 tokens at $1.00
B bids for 300 tokens at $0.80
C bids for 400 tokens at $0.60
D bids for 500 tokens at $0.40
The auction sorts bids from highest price to lowest:
At $1.00, demand = 200 tokens
At $0.80, cumulative demand = 500 tokens
At $0.60, cumulative demand = 900 tokens
At $0.40, cumulative demand = 1,400 tokens
The sale needs to place 1,000 tokens.
At $0.60, demand is still too low because only 900 tokens want to buy at $0.60 or higher.
At $0.40, demand reaches 1,400 tokens, more than the 1,000 tokens available.
➝ So the clearing price becomes $0.40.
➝ A, B, and C get filled in full.
➝ D gets partially filled for the remaining 100 tokens.
➝ Everyone pays the same price: $0.40.
If cumulative demand at $0.60 had reached 1,000 tokens instead of 900, then the clearing price would have been $0.60.
TLDR: the auction stops at the first price level where demand is high enough to absorb the full allocation.
If you want to test your assumptions around market-driven FDV, make sure to understand the dual structure that comes with Crafts.
Crafts links the token to a legal structure where an SPV/DAO LLC signs a SAFE with the company, and token holders get exposure through that entity.