A Detailed Review into CBX’s Auction Mechanism

Gojoy’s First Blind Auction on CBX Exchange

We previously discussed the success of Gojoy’s Initial Auction Offering (IAO) in the form of a blind auction and the innovative elements of it have embarked the interest from the public. It was a sealed bid auction in which bidders simultaneously submit bids to the auctioneer without knowledge of the amount bid by other participants, the highest bidders win the bid until all quantities are filled and the winners pay the amount bid.

JOY Coin is scarce as only 1 billion JOY Coins were minted with 500 million reserved for consumers, 100 million for management, 200 million for equity and only the remaining 200 million are reserved for investors. JOY Coin gives hourly cashback and is of fixed supply. Most people earning JOY would prefer to hold forever to accumulate rewards.

There will be a total of 66 auctions, starting on July 7, the monthly allocation is 3M JOY coins using a blind auction mechanism. During the Gojoy auction, the bids were sorted in descending order and there was a limited supply of 3 million of JOY tokens each month. For the first auction, there was a total of about 50,000 participants placed a total of close to 250,000 bids and the top bids (near 500) won and successfully took part in the IAO. Bidders could place bids ranging from $1.6-$6, bidding prices could be edited within the 48 hours auction window before the auction ends. The minimum amount per bid is $50 and if the bidders submit the same price, the one who places the bid first will win.

Incentives to encourage participation

There were also some extra incentives to encourage participation and increase the competitiveness of the auction. The airdrop was the one that many were long expecting and Gojoy has allocated a maximum of 300,000 JOY for airdrop event. The airdrop was rewarded to all. CBX users who passed KYC before 1st snapshot time will get 1 JOY coin and all CBX users who passed KYC before 2nd snapshot time, and has 300 USDT or equivalent crypto assets at the time of snapshot will receive 5 additional JOY coin.

In addition, for the top 20 bidders with a total amount of USDT200K and above, they can buy get double the quantity of JOY coins of their original bid. For the first 30 buyers bid for not lower than 10,000 coins, they will receive a double reward.

Strategies for maximizing the number of coins purchased

There is actually some interesting psychology for strategic bidders and it can be explained by game theory in Economics given the bid if not fueled by emotions. A strategic bidder may place a few bids based on the expected bids (say high, medium and low) he believes others will submit, he then matches the bid based on the belief instead of the values he is willing to pay, he will only submit the bid if the believed value of the bid is lower than the value he is willing to pay. In reality, the most challenging part is to gather the information of other bidders and even without it, there exists some complicated mathematical formula to help to determine the value one should bid. However, in the Gojoy case, it is almost impossible to achieve the above due to the large quantity for bidding and an unknown number of bidders.

Variety of Auction Format

There is actually a variety of auction format and the Gojoy’s blind auction is one of the more popular ones. For example, a project named Algorand used the Dutch auction format. It means an auction in which the auctioneer begins with a high asking price, and lowers it until some participant accepts the price, or it reaches a predetermined reserve price. Algorand’s Dutch auction sold all the coins at the same price that at that particular price level, all coins are sold and it reaches the equilibrium level.

It is indeed debatable which format is the best but as long as all the rules are communicated clearly upfront and the auction is conducted in a legitimate and transparent manner, as well as all participants are willingly submitting the bids, the auction will be considered a successful one when all coins are sold with desirable prices.

Key to a Successful Auction

The most important part of running a successful auction is the demand of the coin and only if the demand is big enough, the auction can attract enough bidders and it will automatically create the momentum and build up more excitement. Marketing and outreach strategies are the key value-addition to an already desirable and promising coin. The collaboration between CBX exchange and Gojoy has perfectly demonstrated how the two companies have worked together to increase traction for each other.

Thanks to Gojoy’s large existing community and CBX’s enthusiastic traders, the auction has caught a lot of interests and CBX exchange is looking forward to seeing more successes like Gojoy’s.