What is private sale?

A token sale to selected investors before any public round, usually at a lower price and with a lock-up attached.

Terms are disclosed unevenly, so a public buyer may be trading with people whose cost was a fraction of the listing price. Read the unlock schedule before assuming a fixed supply.

This is the round most retail buyers never see and most feel the effects of. By the time a token lists on an exchange, its ownership and cost structure were fixed months or years earlier, and the sellers you meet on day one are frequently people who paid a tenth of what you are paying.

How it works

1. Seed and private rounds. A team sells tokens or rights to future tokens to funds and strategic backers, priced by negotiation. There is no order book and no public price.
2. Documentation. Terms sit in a purchase agreement, commonly a simple agreement for future tokens, which specifies price, amount, and lock-up. These are private contracts and are not always summarized accurately in public material.
3. Public round or listing. A public sale or a direct exchange listing establishes the first market price, usually well above the private price.
4. Vesting. Private allocations unlock on a schedule, typically a vesting cliff of six to twelve months followed by linear release. The schedule, where published, is what unlock events are read from.

The number that matters is not the private price on its own but the ratio between it and the market price, together with how much supply is scheduled to unlock and when. A large gap plus a near-term cliff is a supply overhang regardless of what the project is building.

Example

Illustrative figures. A private round sells 200,000,000 tokens at $0.02, raising $4,000,000. The token later lists at $0.40, twenty times the private price. Private allocations vest over twenty-four months after a twelve-month cliff.

At the cliff, roughly 8,300,000 tokens per month begin unlocking. If daily trading volume is $2,000,000, a month's unlock at $0.40 is $3,300,000 of potential supply against $60,000,000 of monthly volume. Holders sitting on a twentyfold gain do not need the price to hold for the sale to be worthwhile, which is the asymmetry a public buyer is trading against.

Why it matters when you buy

For any token that had private rounds, the scheduled supply arriving over the next quarter is a fact you can check before buying rather than a surprise afterwards. The unlock pressure ranking sizes that against circulating supply and volume, the unlock calendar dates it, and the coin pages show the supply figures alongside.

Related terms

vesting cliff — the delay before any release; unlock — supply arriving on schedule; lockup vesting — the contractual restriction; fdv — valuation counting undistributed supply; ico — the public sale counterpart; token generation event — when tokens first exist.

Questions

How do I find out what private investors paid?

Sometimes from the project's own tokenomics documentation or a fundraising announcement, often not at all. Where the price is undisclosed, the unlock schedule and the gap between market cap and fully diluted valuation are the observable substitutes.

Does a lock-up protect me?

Only until it ends, and the end is the event. A cliff concentrates a large release on one date rather than spreading it, which is why the calendar matters more than the existence of a lock.

Is a private round a bad sign?

No. Nearly every funded project has one. The question is proportion and schedule: how much of the supply insiders hold, at what cost, and how fast it becomes sellable.