The Gnosis Auction auction mechanism prefers fair distribution rather than FOMO, and it also solves the problem of robot arbitrage. However, it also has defects such as stalling when entering an order, and the data will not be automatically updated regularly.
Original Title: “Becoming an Auction Expert at Gnosis Auction in Five Minutes”
Written by: DAOSquare Research Group
I believe that many people have participated in various auctions, different platforms and different auction mechanisms, and many of them have become experts in this area. However, you may be relatively new to Gnosis Auction. Recently, after conducting in-depth research on Gnosis Auction, we found that Gnosis Auction is a very interesting auction tool. Today, I will share our learning results with you, and welcome all experts to discuss together.
introduce
First put the official link .
Quoting the official introduction, Gnosis Auction is a fairer, more transparent and decentralized token price discovery platform.
He has three distinct characteristics:
Eliminate robot arbitrage. Gnosis Auction does not take the form of buy-and-close transactions, but uses separate bidding and unified settlement. Therefore, arbitrage transactions cannot be carried out before the end of the auction period.
Put an end to being forced to chase high. Gnosis Auction and LBP have different auction methods based on AMM transactions, so participants will not be forced to chase higher. You only need to set your own psychological price. The psychological price of everyone together formed the final transaction price.
Reduce subsequent expected consumption. Usually, auctions are only the first step in public distribution, and there are more important links behind, such as Listing. Many projects have excessively consumed expectations during the auction, resulting in insufficient stamina for subsequent listings. Gnosis Auction is restrained on this point, conserving market energy for the project party, and making the entire public distribution process more gradual.
Auction mechanism
Different from Dutch auctions and fixed-price sales, Gnosis Auction adopts a “batch auction”, which is simply:
Bid separately
Unified liquidation
Users can’t directly buy auction tokens into their wallets like on LBP, but need two steps: order pending and clearing. The pending order interface is as follows:
You need to set two parameters:
Then we can simply make a conjecture, assuming that the final auction settlement is 1 DEV = 2.68 DAI. Then the order can get 45.52 DEV.
But as I just said, you can’t get the token immediately after you submit the order. You need to wait for the unified liquidation after the auction period ends. Whether you can make a successful purchase depends entirely on the liquidation process. Therefore, it is very important for us participants to understand the principles of liquidation.
Liquidation
Before introducing settlement, we’d better understand two important price indicators:
Min Sell Price (the lowest acceptable price)
Min Sell Price is the bottom line of the price set by the project party. If the unit price you set when placing an order is lower than the bottom line, you cannot submit the order.
Current Price (Estimated current clearing price)
Don’t be misled by the English language. Before the auction ends, this parameter is a liquidation estimate calculated based on the total orders in the current auction. It provides us with a price reference for the final transaction price, that is to say, this is an important reference indicator for your pending order bid. But this price changes dynamically with the increase and decrease of pending orders. Therefore, the closer the auction ends, the closer the price will be to the final settlement price.
Note: Before the auction ends but is not settled, the Current Price will be changed to Clearing Price, indicating that the clearing price has been fixed. After the settlement is completed, the Clearing Price will be changed to Closing Price again, indicating that this is the final closing price and the settlement has been completed.
So how is this liquidation price calculated? This involves the liquidation mechanism of Gnosis Auction. After the auction period is over, Gnosis Auction will automatically start liquidation work, in simple terms:
Remember the two values ​​you filled in when you placed the order? Unit price and amount. Gnosis Auction will sort all orders in order of unit price from high to low, and then combine the amount of these orders to accumulate in the order of price from high to low. What is the accumulation? Cumulative Token quantity. Let’s look at an example.
The picture above shows an auction situation. Each square in the figure represents a Token. The X-axis (horizontal) position of the square represents the price (low left and high right), and the Y-axis represents the number of tokens at different prices.
Combining the knowledge points introduced above, we can see from the above figure that the acceptable reserve price for this auction is 21 USDT, and the two Tokens with a price of 20 are not within the scope of liquidation (in fact, the order cannot be submitted). Therefore, the clearing range of this auction is all orders from 21 USDT to 30 USDT, a total of 34 Tokens.
Assume that the total supply of tokens in this auction is 21 tokens. Therefore, we need to filter out the qualified 21 tokens from the 34 token orders. Well, the liquidation begins.
30 USDT: 3 Token
29 USDT: 6 Token
28 USDT: 4 Token
27 USDT: 5 Token
26 USDT: 3 Token
When accumulated to 26 USDT, the total number of Tokens is 21, reaching the total supply of Tokens for this auction.
Here comes the key point, 26 USDT is the clearing price of this auction. At the same time, this action also determines who has succeeded in the auction and who has failed in the auction:
All orders that have just been included in the calculation are considered valid orders
All orders that are not included in the calculation are considered invalid orders. That is, the order whose unit price is lower than the clearing price.
So, how do these valid orders be traded?
The method of Gnosis Auction is that it will not settle the order at the price when you placed the order, but will settle at the final settlement price just calculated (for example, 26 USDT in the example). In other words, even an order with a pending unit price of 30 USDT will eventually be settled at a settlement price of 26 USDT. Is everyone happy? !
Liquidation seems to be a very complicated process, but there is a trick that can help you master the essence without thinking. There is a chart on the auction page, see here:
The dotted line (vertical line) in the figure is the Current Price just mentioned, the current liquidation price estimate. The further to the right of this line, the higher the price, and vice versa. So you only need to pay close attention to this line, you can know:
### Advanced
If your routine is rough stud, then please skip this part and go straight to the “tips” part. If you want to take a closer look, let’s take a step further and learn more about the other important parameters of Gnosis Auction:
These values ​​show the basic information of the auction.
Total Auctioned: The total amount of tokens in this auction (remember the total supply of tokens mentioned in the liquidation calculation just now?)
Current Price and Min Sell Price: I have already introduced it in detail just now, so I won’t repeat it
Minimum Fuding: The minimum total auction amount set by the project party. If it is less than this amount, the auction will not be liquidated, and everyone will go back to their respective houses. Of course, the money you have invested can be recovered.
Estimated Token Sold: Simply speaking, it shows the current sales performance, that is, what percentage of the total sales volume has been completed. This is an important indicator, which will be mentioned in the tips section!
Min Bidding Amount Per Order: The minimum order amount allowed for each order. Remember the two parameters mentioned in the pending order section? Unit price and order amount, this parameter is the minimum limit for a single order amount. Combined with the Min Sell Price parameter, your pending order must exceed these two minimum limits, otherwise, your order cannot be submitted.
Tips
Finally, I would like to share some experiences with you, which may make your participation process smoother.
You can safely put the unit price higher
The clearing mechanism of Gnosis Auction is introduced above. It will not settle the token for you at the unit price of the order (unless your bid is exactly equal to the final clearing price), but will take the lowest price in the effective order as the final clearing price. Therefore, you can safely put the unit price higher. Why? This way you are more assured of being included in the valid list.
Keep an eye on that dotted line
The dotted line in the chart is introduced above, which is an important risk warning. As mentioned earlier, this line will change dynamically, even if your bid is higher than this warning line when placing an order, you may not always be in the safe zone. If you do not want to be eliminated, please pay attention to this line at any time. If your pending unit price is equal to or lower than this line, you need to pay attention to it, and judge for yourself whether you need to cancel the order, adjust the price and re-enter the order.
Pay close attention to price trends after 100% sales
When the parameter of Estimated Token Sold reaches 100%, Current Price becomes active, and may even vary greatly. This means that your pending order is in turmoil. If you want your pending order to be in the list of valid orders, it is best to pay close attention to the Current Price and react in time (withdraw the order, adjust the unit price, and re-enter the order).
Refresh the webpage diligently
The key values ​​you see (such as the current clearing price estimate) will be automatically refreshed after you initiate a pending order transaction. However, if you do not make a pending order transaction, the web page will not be automatically updated (slot point). Therefore, if you want to know the latest situation, it is best to be more hands-on and refresh the web page.
Don’t rush, think about it before placing an order
Gnosis Auction is different from LBP. There is no need to rush, and it will not gain any first opportunity or advantage because you enter the market early. Therefore, we must first carefully understand all the parameters of the auction, and then carefully consider how to bid, and then place the order after thinking about it. Although Gnosis Auction supports order cancellation, Gas still pays. So, think before you act.
Summarize
The auction mechanism of Gnosis Auction is more inclined to fair distribution than FOMO. At the same time, its auction mechanism naturally solves the problem of robot arbitrage and makes the auction process healthier. Of course, it also has several shortcomings, including when entering the order, there will be a freeze when entering the value, and the data will not be automatically updated at regular intervals, etc. However, in general, Gnosis Auction is a mild auction method, not radical, very calm, and very suitable for community release of projects that focus on long-term health. Finally, I remind everyone, please manage your own risks well and remember to follow the trend blindly.
