How to Participate in RAI Surplus Auctions

Guide to Bid in Auctions Using a UI or a Bot

In this post, we’ll give an overview of RAI surplus auctions and the two main options you can use to bid in them. Throughout this article you will see several links to resources that can help you get set up for bidding.

What are Surplus Auctions?

Surplus auctions are used to sell off a fixed amount of RAI in exchange for FLX tokens. In a surplus auction, bidders submit increasing amounts of FLX in exchange for the same amount of RAI and in the end, the winner receives all auctioned RAI in exchange for their FLX.

Half of the received FLX is sent to FLX/ETH LP stakers that protect the RAI protocol from insolvency. The other half is burned.

How Do Surplus Auctions Work?

Before we describe the auction process, let’s go over a couple of important parameters:

• totalAuctionLength: this is the total auction duration. It’s worth noting that if no one bids in the auction within totalAuctionLength seconds since it starts, the auction can then restart and run for another totalAuctionLength seconds
• bidDuration: this is the amount of time the auction can still run for after someone submits a bid. If someone submits a bid and no new bid comes in for the next bidDuration seconds, the auction can settle. On the other hand, if someone does submit another bid within bidDuration from the last one, the auction can run for another bidDuration seconds. Note that the auction is still bound to run a maximum of totalAuctionLength seconds
• bidIncrease: this is the minimum percentage increase in a new bid compared to the last submitted bid. For example, let’s say the current bid is 1 FLX for 50 RAI and bidIncrease is 5%. This means that the next bid must be at least 1.05 FLX for the same amount of RAI. This parameter minimizes griefing (to a certain extent), meaning that bidders must submit bids that are significantly higher than the previous ones

In RAI’s case, the parameters are set (and already ungoverned) as follows:

• totalAuctionLength: 3 days
• bidDuration: 90 minutes
• bidIncrease: 5%

Now, let’s analyze two separate scenarios to see how surplus auctions may play out in the wild.

In the first auction, let’s assume Alice is the only bidder. The auction starts and it has 3 days left to finalize. Alice bids 1 FLX for 50 RAI. The next bid (using the mainnet RAI parameters) would need to be at least 1.05 FLX for the same amount of RAI. Given that Alice bid, the auction has 90 minutes left and, assuming no new bid comes in, it can be settled.

In the second auction, let’s assume we have two bidders, Bob and Charlie. Bob submits the first bid, 2 FLX for 200 RAI. The 90 minute countdown for the auction starts. Charlie waits 60 minutes and decides to bid 3 FLX for 200 RAI (even though the minimum to bid was 2.1 FLX). The 90 minute countdown restarts and Bob decides to send another bid of 3.2 FLX. 90 minutes pass and there’s no new bid so Bob becomes the auction winner.

As you can see, auctions can be competitive, which benefits the RAI protocol, although this is only possible if the Reflexer community has the right tools they can use to bid. Let’s dive a bit more into the two main ways anyone can use to participate in surplus auctions.

Overview of the Surplus Auction Dashboard

The easiest way to bid in a surplus auction is with the Reflexer surplus auction dashboard.

The dashboard gives you an overview of all active surplus auctions and allows anyone to submit FLX bids. The UI shows the latest bid value for each auction as well as the end date for the auction and the full bidding history.

You can use all this data to decide if you’d like to participate in an auction. In order to bid, choose one auction and click on the Bid-> button.

Once you click on Bid->, you should see a popup where you need to input the FLX bid you want to submit. Enter the amount of FLX you wish to bid and click Review Transaction.

Finally, click on Confirm Transaction and then approve the transaction in your wallet.

You should now see your bid listed under the surplus auction.

Congrats! You just participated in a surplus auction using the bidding UI. There is however another way to automate the bidding process and that is with the surplus auction bot.

Overview of Surplus Auction Bots

The surplus bot is a script that can be run continuously to monitor the status of surplus auctions in the RAI protocol.

Surplus auction bots can:

• Start Surplus Auctions
  If the RAI protocol has enough surplus accrued in the protocol, anyone can start a surplus auction. Once an auction starts, anyone is free to bid in it. Multiple surplus auctions can run at the same time.
• Bid in Surplus Auctions
  The bot can automatically bid on new auctions and also out-bid other bidders on existing auctions.
• Settle Surplus Auctions
  When no new bids have been received for bidDuration, a surplus auction can be settled. This completes the auction process and transfers RAI to the winning bider.

Running the Surplus Auction Bot

The surplus auction bot can be run from a docker container or directly on a Linux host. Docker is the preferred method in order to avoid dependency issues.

Detailed instructions used to run a surplus auction bot can be found here.

What Now?

This guide should have covered what surplus auctions are, how they work and how you can take part in them. To learn more about auctions and about RAI in general, check out the following resources:

• RAI Docs
• Reflexer Discord
• Reflexer Twitter