Allotment is a process that allows investors to purchase shares in an Initial Public Offering (IPO) or other security offering without having to pay the full purchase price up front. The allotment process usually begins with a company announcing its intention to issue new securities, such as common stock or bonds. Investors who are interested in purchasing these securities must then submit their bids for how much they would like to buy. After all bids have been received, the company will look at them and determine which ones they want to accept and what prices they are willing to offer those investors. Once this decision has been made, each investor’s individual allotment will be determined based on how much of the total offering was purchased by that particular investor.
In cryptocurrency markets, allotment can be used for large orders of tokens when a new digital asset is issued via an Initial Coin Offering (ICO). In this case, it allows buyers with larger amounts of capital access more tokens than smaller buyers due to the demand from institutional investors being higher than retail investors. This form of allotment offers significant advantages over traditional methods since it eliminates potential market manipulation by allowing everyone involved in the ICO equal chances of obtaining tokens regardless of their investment size.
