The initial supply of tokens in the market can be implemented in various forms. Some prefers ICO, others use Airdrops. But there are projects that resort to closed auctions.

What is a closed auction tokens

A closed auction tokens involves the issuance of applications by all participants “blindly”, that is, not knowing the conditions under what conditions other users made bets. This is done in order to exclude the possibility of price manipulation.

The process of calculating applications, as well as the impossibility of their multiple exhibition and a guarantee of payment is carried out using various tools, one of which is smart contracts. It is worth noting that the participants do not know anything about each other’s bets only at the time of their presentation. After the auction is completed, the information becomes available.

The principle of operation of a closed auction of tokens

The implementation of a closed auction of tokens takes place in four stages.

At the first stage, those who wish are directly reported about his details. The announcement is posted through social networks, an official website or in other ways. As a rule, it contains the most general information about the details of the upcoming auction: how many tokens will be available, the time frame of its conduct, the size of the minimum and maximum bets and others.

At the second stage, applications from participants are collecting. This is done without disclosure, as the auction is closed. In fact, those who wish simply notify the organizers about how much they want tokens and at what price.

The third stage is the application blocking. As soon as one participant has decided on the purchase price and the number of tokens, he can no longer change his original rate.

At the fourth stage, through smart contracts, cryptocurrency is distributed according to the applications received. This can happen according to various schemes. One of the easiest is the distribution in accordance with the applications where the maximum prices were indicated. In other words, who offered more for tokens, he eventually received them.

A closed auction of tokens has its characteristic pros and cons. Consider them in more detail.

Advantages of a closed auction of tokens

The main plus of a closed auction is a more “honest pricing” ”token. Participants do not see each other’s bets. This forces everyone to set prices that are close to the real value of the asset.

Also, an undoubted advantage of closed auctions is the reduction of robots that can be useful if you need lightning -fast actions. Given that applications are accepted over a certain period of time, the speed of their filing does not matter much.

In addition to bots, the influence of large players (whales) is also limited in closed auctions. In the same open auction, their domination is absolutely not limited, since due to the resource and complete information about the bets of competitors they can interrupt any proposal.

In addition, in closed auctions during the distribution of tokens, the possibility of various market manipulations such as the PUMP and DUMP or frontraning scheme (setting their application before a major application of another client) is reduced. This again happens due to the fact that participants do not know in advance about each other’s bets.

Closed auctions can increase confidence in blockchain technology and smart contracts, since everything happens when they are direct use.

Disadvantages of a closed auction of tokens

The first drawback of a closed auction of tokens is the lack of openness of the process. Ignorance of what applications others have put up can cause fear among the participants.

The second drawback comes from the first – this is a difficulty. Many private investors will have no desire to understand the intricacies of a closed auction. This will lead to the fact that they will not participate in the distribution of tokens.

The third minus – a closed auction requires sufficiently large monetary injections. This is due to the fact that it is necessary to conduct a certain marketing program to attract investors, and the technical organization will also not be free. Thus, projects with low capitalization are unlikely to resort to it.

The fourth minus is the risk of hacking. Smart contracts with all their functionality remain vulnerable to scammers. Those technologies that are used to conduct closed auctions of the distribution of tokens are no exception.

The fifth minus is the risk of underfunding. As a rule, any project has a plan to attract funds. Often it can come out so that it is not implemented, and the project is failing because of this.

Real examples of a closed auction of tokens

The most famous example of a closed auction has recently been the case of Real Memcoin in April 2025. The ideological inspirer of the project was the famous master of mixed martial arts of Conor McGregor.

The meaning of a closed auction in the case of Real was as follows:

  • Participants could make bets in the USDC stabelcoin;

  • For all manipulations, they were given a little more than a day – 28 hours;

  • After that, an automatic calculation of applications was carried out, and the tokens were distributed between those who offered the highest price until the moment their entire offer has run out.

As a result, it was planned to collect a little more than $ 1 million. However, the auction turned into a complete failure. Real could not attract half of the intended amount, content with only $ 392,315. All initial applications were returned. There were several reasons for this development.

Firstly, an unsuccessful moment for entering the market was chosen. Investors have already lost its former interest in memcins, and Real was no exception. Secondly, the image of McGregor played an angry joke. He, of course, the character is quite shocking and well -known, but a fairly indirect is related to cryptocurrency. This could cause investors a suspicion that the presence of McGregor is only a PR ridge, and the project itself is unacceptable in the long term. Thirdly, the process of unlocking tokens was too tight. He took as many as 12 hours, which led to thought about the possibility of various market manipulations.

Conclusion

A closed auction of tokens is a process of distribution of cryptocurrency in which the chances of market manipulations are minimized, and pricing becomes more honest. At the same time, their holding is quite complex and obscure for ordinary investors. In addition, projects with low capitalization rarely allow them due to the need for serious monetary investments.

This material and information in it is not an individual or other other investment recommendation. The view of the editorial office may not coincide with the opinions of analytical portals and experts.