Gnosis Auction is a platform for conducting fair, transparent, and decentralized token price discovery.
Gnosis Auction enables Batch auctions for everyone, it aims to provide a resilient and easy-to-use tool that enables anybody to auction ERC-20 tokens on Ethereum.
Batch auctions are a fair pricing method that has been battle tested in traditional finance. Some of its uses include everydays Open auction in the NYSE, Direct listings, as well as in IPOs (Google being the most prominent).
Gnosis Auction’s mechanism adds few major benefits over existing approaches available today on Ethereum like fixed price sales, Dutch Auctions, IBCO or Balancer LBP. Gnosis Auction is front running resistant, offers user friendly bidding experience, enables users full control over their participation price, and offers a fair single clearing price.
- Front running (MEV) resistant - Gnosis Auction prevents front running bots from extracting value, by not allowing them to purchase tokens early and sell later at a higher price. In contrast to AMM solutions, the auction mechanism does not allow miners to extract value from users by using sandwich attacks.
- User friendly bidding experience - In contrast to other mechanisms, Gnosis Auction enables bidders to participate at their leisure, without needing to time their activity in order to get the desired price.
- Full control over participation price - One of the advantages of Gnosis Auction is the bidder’s ability to limit the price at which they are willing to buy. In contrast, IBCO requires the bidder to commit to participation without knowing the token’s eventual valuation.
- Fair pricing - All bidders will receive the same clearing price, which is determined when that auction concludes.
- Order Settlement - Auctions can settle more than 10,000 bid orders with the same settlement price.
- Permisionaless - Auctions can be deployed without the need to ask for permission.
- Composable - Auction setup is modular enough to satisfy many different use cases’ needs.
- Gnosis Auction is built on the proven success of past blockchain-based auction developments.
How do Batch Auctions work?
- In batch auctions, there is one auctioneer and multiple bidders.
- The auctioneer defines the sell amount and the limit price for the auction. The sell amount is the amount of tokens the auctioneer would like to sell and the limit price is the minimum price they are willing to receive for the asset.
- Once the auction is started by the auctioneer, bidders can participate by placing their bids, through limit orders, specifying an amount and a limit price.
- The auction runs until a certain date. After this date the auction is over, and no more bids can be placed.
- At the auction clearing, the auction calculates the final clearing price. This will be the price where the supply and demand curve intersect
- This final clearing-price will be the final clearing price for all participants.
- Bidders who specified a maximum price in their limit order that is greater than the final clearing price receive auctioned tokens at the clearing price.
- Bidders that specified a maximum price in their limit order that is less than the final clearing price do not receive the auctioned tokens. But for sure, they can still withdraw their bidding tokens from the auction.