Announcing Gnosis Auction Launch
Gnosis Auction, the new Lego piece for token price discovery in the DeFi toolbox, is now live on Ethereum Mainnet and xDai.
Gnosis Auction is a platform for conducting fair, transparent, and decentralized batch auctions to enable token price discovery for any Ethereum project.
You can bid on auctions at gnosis-auction.eth.link. Follow Gnosis Auction on Twitter or the platform to learn about upcoming auctions.
You can launch auction sales (IDOs, token buybacks, or for other price finding needs) directly using the Gnosis Auction Starter Safe App, with funds and a token governance tool suite immediately at your team’s fingertips in your Gnosis Safe Multisig.
By supporting fair price finding in token sale auctions, the platform provides a reliable mechanism for teams to let their community and market forces determine a token’s value. At the same time, the platform is designed to be completely composable to integrate with any other DeFi protocols. Visit the platform today, and follow the Gnosis Auction Twitter to stay up to date with upcoming auctions.
Born out of the demand within the community to have a decentralized and permissionless platform to conduct fair price discovery, Gnosis Auction is inspired by Gnosis Protocol v1 (Mesa), which satisfied a product-market fit for Initial DEX Offerings such as mStable, DIA, PrimeDAO, API3, and many more. The adoption of Gnosis Protocol v1 (GPv1) for the IDO use case signaled that there’s a strong market demand for a price discovery platform extending beyond GPv1’s initial scope. Gnosis Auction facilitates batching a much larger set of orders, which caters specifically to the Initial DEX Offering use case, as well as other large auctions such as token buybacks or protocols’ collateral auctions.
Gnosis Auction: A platform for fair price discovery
Ultimately, Gnosis Auction introduces a new price discovery primitive to decentralized finance. Gnosis Auction differs from former Dutch auction iterations, in that bidders can place limit orders at any time during the auction without having to wait for the auction to reach their desired price.
At its core, Gnosis Auction uses batch auctions, which enables matching limit orders of buyers and sellers with the same clearing price for all participants. The batch auction mechanism is a novel approach for a decentralized token auction as it allows bids with a limit price at the clearing price, or even higher, to receive a much fairer price for the tokens they are interested in acquiring. The price equilibrium achieved by batch auctions also prevents wasting resources to settle orders that are below the clearing price.
In the end, everyone can claim their part of the auction: the auctioneer can withdraw the raised funds, the matched bidders can withdraw their new tokens, and the unmatched bidders can still withdraw their bidding tokens back from the platform.
How does the Gnosis Auction batch auction mechanism work?
For Auctioneers
Any person or team that wants to interact with Gnosis Auction smart contract for the purpose of conducting a token auction can either use the simple Gnosis Safe App called Gnosis Auction Starter or run a script.
The Gnosis Auction Starter Safe App is available directly from the Gnosis Safe Multisig interface on the APPS page. Using the app for Gnosis Auction has the tremendous benefit of your raised funds becoming immediately available after the auction closes in your Gnosis Safe Multisig, the most trusted platform to manage digital assets on Ethereum, with token governance tools like SafeSnap at your fingertips.
To launch an auction, the auctioneer will only be required to configure six auction parameters (if needed, the platform offers more parameters to configure) displayed above, which are:
- Auctioning-token: refers to the token you want to sell in the auction, with the token address as a string.
- Bidding-token: refers to the token the bidders will use to bid on the auctioned token (e.g. USDC, ETH, or DAI), with the token address as a string.
- Sell-amount: refers to the amount of tokens that you will sell, with the amount as an integer.
- Min-buy-amount: refers to the minimum amount of buy tokens you are willing to accept. The minimum sell price of the auction is calculated by dividing the sell-amount/min-buy-amount.
- Duration: refers to for how long is the auction going to last.
- Network: refers to the network where the auction will take place (e.g. Mainnet or xDai).
That’s it! With all those parameters set in place, the auction can go live. Bidders who are interested in acquiring the tokens auctioned can start to place buy orders with their own limit price as soon as the auction begins.
For Bidders
- Once the auction begins, bidders can place limit orders directly from the Gnosis Auction platform’s interface (displayed above).
- Once the pre-defined auction duration time comes to an end, the token’s clearing price is calculated.
- The smart contract sorts bids from highest to lowest price. Bids include a limit order for the token price and the amount of tokens to buy.
- The smart contract works backward from the highest bid, cumulatively adding each bid’s amount of tokens to sell, until the bid’s sum multiplied by the price of the highest bid equals the sell amount of tokens (pre-defined by the auctioneer).
- The price of the bid (added to all previous bids’ amount of tokens) that reaches the amount of tokens to sell is selected as the final clearing price for all participants.
- Bidders who specified a maximum price in their limit order that is equal to or greater than the final clearing price receive 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 tokens being auctioned, but they can still withdraw their bidding tokens from the DEX.
Let’s take a deeper look at the example provided in the diagram below.
The diagram shows an example of how an auction calculates the final price:
- At first, the auctioneer establishes the minimum price for which they are willing to sell tokens and an amount of tokens to be auctioned. In this example the auctioneer is selling 14 tokens at a minimum price of 2 tokens (established by the first square on the X axis).
- Once the auction begins, bidders can start placing bids, in which they specify how much of the bid token they would like to buy with and at what price.
- When the auction duration time has come to an end, the smart contract sorts the bids from highest to lowest, stopping at the price in which the cumulative volume of the bids have reached the amount the auctioneer was willing to sell, in this case 14.
- Since we have 14 tokens to auction, the diagram shows that the highest bid price was 2 tokens at price 9, followed by 3 tokens at price 8, 5 tokens at price 7, and 4 tokens at price 6.
- With the last bid (4 tokens at price 6), the auctioneer has no more tokens to sell, and the auction establishes that the auctioned token final clearing price is at 6 for all participants.
- Participants whose bid is equal to or greater than the final clearing price will receive the auctioned tokens. Participants with bids less than the final clearing price can reclaim the token balance with which they had bid.
- Participants whose bid is at or above the closing price will receive the auctioned tokens.
What are the benefits of using Gnosis Auction?
The Gnosis Auction smart contract allows for both technical and nontechnical users to use its auction mechanism for their needs. The platform makes participating in token auctions easy for anyone, in any context in which token price discovery is needed. Some of the core advantages of Gnosis Auction are:
- Auctions can settle more than 10,000 bid orders with the same settlement price.
- Auctions can offer fair pricing via a uniform final clearing price.
- Auctions are resistant to front-running and other forms of manipulation.
- Auction participants have full control over their bid price through limit orders.
- Auctions can be deployed without the need to ask for permission.
- Auction setup is modular enough to fit many different use cases along with their different needs.
- Gnosis Auction is built on the proven success of previous blockchain-based auction developments.
How is Gnosis Auction different from other auction-style platforms?
Gnosis Auction’s product offering is distinct because its batch auction mechanism offers a unique approach to user protection. Such a mechanism, combined with a powerful and simple interface empowers auctioneers and bidders to avoid the most common problems on other platforms often used for price discovery:
Gnosis Auction Roadmap: Launching auction sales from the Gnosis Safe
Currently, Gnosis Auction only supports ERC-20 tokens and can only facilitate auction sales, not ongoing liquidity pools. However, soon, the platform will be connected to other DEX tools for widening the product offering beyond auction sales. With the Gnosis Safe integration (a multi-signature platform currently managing $26,8 Billion of dollars in value), Gnosis Auction will allow teams that use the Gnosis Safe App to have access to a new world of apps and modules that can enhance the auction. The modules from the current Gnosis Safe App ecosystem will allow teams to add specific features to their auction such as:
- Governance Modules (SafeSnap): There are a suite of tools for decentralized governance coming to the Gnosis Safe. The first available module is SafeSnap. Combining Gnosis Safe Multisig with the popular decentralized governance platform Snapshot, SafeSnap enables decentralized execution of crypto governance proposals, through on-chain execution of off-chain votes. Other upcoming modules will bring mechanisms from popular governance frameworks like MolochDAO to the Gnosis Safe. For more information, check out Introducing SafeSnap: The first in a decentralized governance tool suite for the Gnosis Safe.
- Liquidity Module: This module will allow auctioneers to ensure that the token has a dedicated place to trade afterward. By connecting the end of the auction directly to an AMM pool, auctioneers can assure bidders that the token will have enough liquidity to trade at the auction clearing price or more.
If you are interested in developing a new module that combines Gnosis Safe and Gnosis Auction, check out our GECO grants and join our Discord.
Audit & Security
Gnosis Auction has been developed with security foremost in mind. The platform has successfully passed an external audit with a security expert that can be found here. We also have a running $50K bug bounty program.
Visit the Gnosis Auction platform today at gnosis-auction.eth.link.
To learn more, check out the Gnosis Auction documentation.
We also invite you into our Gnosis Discord Server and Gnosis Forum where you can ask any questions about the platform, and make suggestions about what Gnosis Auction future’s should look like.
We look forward to seeing where the community will take this tool for fair, accessible, and efficient price discovery!
Anyone can utilise Gnosis Auction to conduct a token auction subject to the laws applicable to them. Gnosis Ltd, GnosisDAO or any affiliated entity (“Gnosis”) has no involvement with the auctioneer(s) or the auctions, which are independently organised by the auctioneer(s). Gnosis is only involved in developing the smart contracts that make the dapp run.
