Effects of the Paywall on First-Time Listings for Auction
Members must pay in BUNs to join an auction; here’s why: NFTs are listed for time-limited auctions (in a pay-to-bid style) with an end time. Up to six hours before the end time, members can join an auction by spending five BUNs, accounted for as their first bid. After that, they spend one BUN at a time to bid and cannot outbid themselves. A bid received in the last 15 seconds of the auction resets the timer back to 15 seconds, meaning that auctions can last for hours or days in “extra time.”
The first reason to set up a paywall (i.e., the fee members must pay to have a seat at the auction table) is that it functions as an incentive to join early while also seeding the auction with participants and crowdsourced bids (since paywall amounts get added to the auction receipts for an NFT). When there are less than six hours to the end, the paywall doubles to 10 BUNs, doubling every six hours of extra time after that (although bidding continues for members that joined previously). Hence, it gets costlier to join an auction as time passes, self-regulating the number of members participating in an auction since doubling the joining fee quickly reaches a large amount, pricing out most members.
Impact of the paywall on participation from the population of members: As a member’s account is capped at 50,000 BUNs, at some point, the doubling of the paywall means that no new participants can get in that auction since the paywall would be more than that cap (about 78 hours after the start of the paywall doubling).
The following graph shows the profile of BUNs collected at auctions over time:
This graph is particular to the battle-bidding auction scenario. Questions can be directed to the authors.
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