Zama ICO pioneers crypto auctions! 3 days to attract 118 million in oversubscription at 218%

Zama pioneered confidential auctions to complete an ICO, with a total transaction volume of 118,500,000 USD, and 3 days TVS surpassing one hundred million. 11,103 participants bid with a clearing price of 0.05 USD, oversubscribed by 218%. On January 24, it became the most used application on Ethereum, surpassing USDT and Uniswap, demonstrating that FHE technology has reached production level.

Zama ICO Creates Ethereum History, Breaking 100 Million in 3 Days, Outperforming Similar Protocols

Zama’s public auction became the first production-level application built on a fully homomorphic encryption (FHE) protocol, showcasing its feasibility and scalability in real-world applications. This project has been in the making for some time; a few weeks ago, Zama announced its launch on the Ethereum mainnet and completed its first confidential USDT (cUSDT) transfer. In recent days, the explosive growth of Zama’s auction application has shocked the entire cryptocurrency industry.

On January 24, Zama’s auction application became the most widely used application on Ethereum, a highly significant achievement. Notably, it surpasses stablecoins like USDT and USDC, which handle billions of dollars in daily transactions, as well as Uniswap, the leading decentralized exchange. For a newly launched protocol, this level of usage is almost unprecedented.

Even more astonishing is the speed. Zama took only 3 days to reach a total value shielded (TVS) of over 100 million USD, whereas other Ethereum-based privacy protocols took years to achieve this milestone. This contrast reveals the market’s strong demand for truly usable on-chain privacy solutions. Over the past few years, many privacy protocols, despite advanced technology, have been limited by performance bottlenecks or user experience issues, preventing large-scale adoption. Zama’s 3-day achievement proves that when the technology reaches a critical maturity point, market demand can explode instantly.

During its operation, the protocol experienced no downtime and could keep pace with Ethereum’s throughput. This is a key technological milestone, demonstrating that FHE (Fully Homomorphic Encryption) is now ready for production use. Anyone building financial applications on blockchain can deploy it at scale. Previously, homomorphic encryption was considered unsuitable for blockchain environments due to high computational costs, but Zama’s successful operation breaks this misconception.

Dissecting the Confidential Sealed Bid Dutch Auction Mechanism

Zama’s ICO adopted an innovative confidential sealed bid Dutch auction mechanism. After studying over a hundred token distribution models, the Zama team found that this auction mechanism strikes the best balance among fair distribution, price discovery, and capital efficiency. This choice was not accidental but based on a deep reflection on the shortcomings of traditional ICOs.

In a Dutch auction, the transaction price is not the highest bid but the lowest price at which the auction clears. This mechanism ensures all successful bidders pay the same price, avoiding the “winner’s curse.” Participants do not need to guess others’ bidding strategies but can bid based on their true valuation of the project. This design greatly reduces speculative gaming and makes price discovery more authentic.

Confidentiality is the core innovation of the entire mechanism. Participants set a public price and a private quantity. No one can see the specific bid amounts, including other bidders, MEV bots, or the Zama team itself. This design addresses a key issue in traditional auctions: when participants can see others’ bids, price discovery becomes distorted because people are influenced by each other rather than bidding according to their true intentions.

After the auction ends, the settlement price is calculated directly based on encrypted data, using homomorphic computation. This means the entire clearing process can be performed without decrypting individual bid information, yet still determine the final market clearing price. This “computation over ciphertext” capability is the core advantage of FHE technology, and Zama’s ICO serves as an excellent real-world demonstration of this capability.

Stunning Data Behind the 118.5 Million USD Transaction Volume

The data from Zama’s ICO reveals the enormous demand for privacy technology in the crypto market. The total shielded funds (TVS) of 121,300,000 USD directly transacted within the Zama auction app is the most direct indicator of the protocol’s actual usage. TVS differs from TVL (Total Value Locked); it specifically refers to the scale of assets protected by encryption, better reflecting the real adoption of privacy protocols.

The total transaction volume reached 118,500,000 USD, including three platforms: Zama’s main auction platform, 2,200,000 USD from KuCoin auctions, and 4,200,000 USD from CoinList auctions. The multi-platform distribution strategy expanded the participant base, but the core activity remains on Zama’s own application, demonstrating the protocol’s inherent attractiveness.

Across the three platforms, there were 24,697 bids from 11,103 unique bidders. On average, each bidder placed 2.22 bids, indicating cautious participation, possibly with multiple orders at different price levels. The 11,103 independent participants is a substantial number for a new protocol’s ICO, far exceeding the early community size of most projects.

The final clearing price was set at 0.05 USD, a market-discovered price based on real supply and demand. The winning bidders paid a total of 44,000,000 USD, meaning 74,500,000 USD worth of bids were not executed because their bid prices were below the clearing price. The demand was 2,805,849,657 tokens, but only 880,000,000 tokens were sold, resulting in an oversubscription of 218%.

An oversubscription rate of 218% indicates market demand is 3.18 times the supply. This kind of supply-demand imbalance often signals strong post-listing performance, as unmet demand tends to chase in secondary markets. The refund rate was 62.89%, which seems high but is normal in Dutch auctions, as many investors bid at multiple price points to ensure success, with only the bids closest to the clearing price being fulfilled.

BE Token Economics and Future Roadmap

Zama’s public sale accounts for 12% of the initial supply, divided into three parts: community sale (2%), public auction (8%), and presale (2%). This layered distribution balances community engagement, fundraising scale, and long-term development needs. The 8% public auction share is the main portion, ensuring sufficient market liquidity and decentralization.

The upcoming TGE presale will give those who missed out in the auction a chance to purchase. BE tokens will be sold at the auction clearing price of 0.05 USD, with a participation cap of 10,000 USD. This design emphasizes fairness, allowing participants who missed the auction to enter at the same price rather than paying premiums on secondary markets.

Claiming will start on February 2. BE tokens will be distributed as standard ERC-20 tokens, fully unlocked and immediately usable for paying encryption and decryption fees on the Zama protocol. The fully unlocked design avoids the common lock-up periods and vesting plans of traditional projects, which may increase short-term selling pressure but also demonstrates the team’s confidence in the project’s fundamentals.

All BE holders can stake their tokens with operators of their choice to earn rewards and help secure the Zama protocol. The staking mechanism not only provides yields for holders but also establishes the protocol’s economic security model. Operators need to stake BE tokens to run validation nodes, and token holders can delegate to reputable operators, forming a decentralized security network.

Using the Portfolio Showcase feature, anyone can start shielding and sending confidential tokens. This feature will be available immediately after TGE, allowing users to experience the core value of the Zama protocol: achieving true transaction privacy on a public blockchain. The era of fully transparent transactions on blockchain is over—just like HTTPS brought encrypted communication to the internet, Zama is bringing encrypted transactions to blockchain.