Mechanics of the token sale

In case you missed it, today Brave raised $36M for the Basic Attention Token.  They had allocated 30 days for the token sale, but sold out of 1B BAT in 24 seconds.

Clearly there is a lot of attention on this space right now – it’s no secret that there’s something going here.  In this case, the reason the sale went so quickly is that there was a very small number of very large buyers — as of right now, the top 100 holders of BAT own 98.8% of the float:

Which raises the question, is this the right way to do things?  In the idealized version of an open, public token sale, the idea would be to spread the ownership as much as possible — since tokens are really meant to be about use rather than simply speculation.

I suspect that we will see variations in the model that attempt to correct for this.  Nick Tomaino suggests doing something akin to a private sale to large investors in advance of the public pre-sale:

While this doesn’t completely solve the problem, it does feel like an improvement over the BAT process — where large investors can participate without crowding out smaller investors and individual users.


  • Twain Twain

    So Pareto effects still at work?

  • awaldstein


    I thought that these ICOs were basically a community activity and that in a sense the raise showed support and was part of the market.

    Seems like I was incorrect.

    Obviously still learning and not completely clear on this as yet.

    • What’s interesting is that there are lots of different ways it can be done, so we are just seeing a lot of experimentation now.

      Feels like the “spirit” of the token sale is not just to raise capital but to distribute the tokens widely among the user base. But because there is so much financial interest right now it might be hard to do that.

      A lot of people, myself included, are kicking themselves for not buying into the Ethereum crowdsale, which as of yesterday was a 733x (!) gain.

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  • i think this document does not constitute legal or investment advice nor should be taken as such. You should not rely on it and if seeking to do an ICO or any other related activity you should seek separate professional counsel.

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