Blackmoon: First-come, First-served

Theory of oversubscription

The “first-come, first-served” rule is one of the possible scenarios investors and companies have to deal with during the fundraising process. Such a situation arises during the period of accelerated demand and results in the chronological order of priority, meaning that the investors who first completed their applications get the full allocation of the funds, while those who completed their applications later in the process are getting their money back.

Like every economic process, fundraising is mainly driven by supply and demand. One of the most commonly-known types of fundraising is IPO (i.e. Initial Public Offering). In this process, the Company offers its shares to the general public, while the potential investors demand securities. In theory, supply and demand may be equal, but this requires outstanding forecasting by the Company and its underwriter.

Often one side of the equation is greater than the other. Oversubscription happens when the investors demand more shares than the Company can or is ready to offer. Oversubscription is a natural part of the process and happens frequently.

What do the Companies do in these cases? Many investors want to get allocation, but the Company is unable to meet the overall demand; in this case there should be some simple and understandable rule to decide how the offered shares will be divided between the applicants.

“The early bird gets the worm” is one of the possible solutions. The formal name of this approach is “First-come, first-served”. Let’s assume a company, XYZ Corp, is going public and offering 1 million shares, USD 1 each. So the total amount of the offering is USD 1M. The underwriter registered the following applications, and on July 7th the IPO book was closed:

The total amount of all applications is USD 1.4M, which is way above the offering amount. The application of A is the first to be executed, as it is the very first received. The sum of A and B application amounts is still below 1M, therefore both of them will be executed in full. After executing first two applications XYZ Corp will remain with USD 400K of unallocated offerings.

The next application from C is higher than the remainder after A and B granted their share in the XYZ IPO. Therefore the C application will be executed only partially, leaving D no chances to take part in the IPO.

All unallocated amounts, namely USD 300K from D and USD 100K from C will be refunded. In this situation it is said that C has faced “underallocation”. The final allocation of shares will be:

Underallocation in real world

Xiaomi Corporation, one of the world-leading smartphone producers, announced the intention to perform IPO in early May 2018, when it filed documentation with the Hong Kong Stock exchange. Underwriters of the Company accepted the requests from June 25 until June 28. The Company finally went public on 9 July, when its shares started trading in HKSE.

Blackmoon brought this investment opportunity to the crypto universe. On June 22, the Blackmoon platform list of assets was expanded to include BMxXMI, the asset token referenced by Xiaomi Corporation shares and aimed to mimic the future performance of these securities. Simultaneously, our designated broker placed a request for the shares for an amount pre-funded by the Token Issuer.

Applications from potential token purchasers were collected in BTC, ETH and LTC. In order to ensure that 1 BMxXMI token represents 1 Xiaomi share, Blackmoon committed to exchange the crypto currencies received to fiat as soon as the actual allocation is known.

On July 9, when our broker received the exact allocation, and we were able to define currency exchange rates, we saw that we are underallocated due to the broker’s books oversubscription. Therefore, the principle “First-come, first-served” stated in the Asset token Supplement was applied to the allocation. Blackmoon will issue the tokens in the amount equal to the total number of shares purchased, and will refund the rest of the allocations received.

We are happy to welcome each and every token holder on the Blackmoon platform. However, in order to ensure that the financial result of each token corresponds to the dynamics of 1 Xiaomi share, we have to refund some of the allocations that were made last. Nevertheless, there will be plenty of new opportunities in the future. Stay tuned, you will be the first to know!

Handy links to stay tuned to our updates:


Investment in cryptocurrencies carries high degree of risk and volatility and is not suitable for every investor; therefore, you should not risk the capital you cannot afford to lose. Please consult an independent professional financial or legal advisor to ensure the product meets your objectives before you decide to invest. Regional restrictions and suitability checks apply.

First-come, First-served was originally published in Blackmoon on Medium, where people are continuing the conversation by highlighting and responding to this story.

Original article was created by: Blackmoon at

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency or ICO.

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