English Auction

Many high-profile NFT collections launch via English auctions to determine fair market value and manage demand. Key examples include:

• Art Blocks: Generative art projects often use ascending-price auctions for initial mints.
• SuperRare: The platform's primary sales frequently employ timed English auctions for single-edition digital artworks.
• Mechanism: A fixed reserve price is set, and public bidding over a set period establishes the final sale price, distributing assets to the highest bidders.

Web3 games use English auctions to sell scarce virtual assets, from land parcels to rare items.

• The Sandbox: LAND parcel sales are often conducted as batch English auctions, where multiple parcels are sold simultaneously to the highest bidders.
• Decentraland: Initial district land auctions used this model for transparent parcel allocation.
• Purpose: This creates a public, verifiable record of asset valuation and prevents front-running or unfair distribution during high-demand sales.

On NFT marketplaces, sellers can list items with an English auction format instead of a fixed price.

• OpenSea & LooksRare: Both platforms offer an 'auction' listing type where sellers set a starting price, duration, and optional reserve.
• Benefits: This format is ideal for sellers uncertain of an asset's exact market value, letting the crowd determine the price. It can create bidding wars for highly desirable items, potentially driving the final price above fixed-price listings.

Some games auction off ultra-rare items or 'loot boxes' containing randomized assets via English auction.

• Axie Infinity: Has used auctions for special Origin Axies and other limited-edition assets.
• Mechanism: Instead of a blind sale or fixed price, these auctions publicly reveal the item's desirability and allow the community to collectively set its value, often creating event-driven market activity.

Decentralized Autonomous Organizations (DAOs) may use English auctions to liquidate assets from their treasury in a transparent manner.

• Process: A DAO votes to sell a donated or acquired NFT. An English auction is held, with proceeds flowing directly back to the DAO treasury.
• Advantage: The public, ascending-price format ensures the DAO achieves a market-clearing price and demonstrates fiduciary responsibility to token holders, as the entire process is on-chain and auditable.

It's critical to distinguish English auctions from the Dutch auction model common in Web3.

• English (Ascending): Price starts low, bidders raise it. Winner pays their bid.
• Dutch (Descending): Price starts high and drops until a buyer accepts. All winners pay the same clearing price.
• Use Case Difference: Dutch auctions are often used for token sales (e.g., Fair Launch), while English auctions are preferred for unique asset sales (NFTs, land) where individual valuation differs.

A descending-price auction where the price starts high and decreases over time until a bidder accepts the current price. This mechanism is often used for fair token launches and NFT drops to discover a market-clearing price without overpaying.

• Mechanism: Price drops on a predetermined schedule (e.g., every block).
• Key Use: Batch auctions (e.g., Google's IPO), NFT projects like Art Blocks.
• Contrast with English: Price discovery moves from high to low, rather than low to high.

A sealed-bid auction where the highest bidder wins but pays the second-highest bid price. This format incentivizes bidders to reveal their true valuation, a principle known as truthful bidding.

• Mechanism: Bids are private; winner pays the price of the runner-up.
• Blockchain Use: Found in some NFT marketplaces and decentralized advertising platforms.
• Key Benefit: Reduces strategic underbidding common in open auctions.

A common auction format where bidders submit private bids and the highest bidder wins, paying exactly their bid amount. This creates a "winner's curse" risk, where the winner may have overvalued the asset.

• Mechanism: Single, secret bid submission; highest bid wins and pays that price.
• Prevalence: Traditional government contracts, early NFT sales on platforms like OpenSea.
• Strategic Complexity: Bidders must guess others' valuations to avoid overpaying.

An auction where multiple identical items are sold simultaneously. Orders are aggregated, and a single clearing price is determined for all units. This maximizes liquidity and minimizes price impact for large sales.

• Mechanism: All bids/asks are collected; a uniform price clears the market.
• Primary Use: Decentralized exchange (DEX) mechanisms like those used by CowSwap and Gnosis Protocol.
• Advantage: Prevents front-running and gas wars by settling all orders at the same price.

The minimum acceptable price set by the seller in an auction. If bidding does not meet this price, the asset is not sold. This is a critical parameter in both English and Dutch auctions to protect seller value.

• Function: A price floor that must be met for a sale to occur.
• On-Chain Example: NFT listings on marketplaces where the seller sets a hidden or public reserve.
• Economic Role: Signals the seller's private valuation and affects bidding strategy.

A mathematical curve that defines a relationship between a token's price and its supply. While not a traditional auction, it is a related price discovery mechanism where buying/selling occurs directly against a smart contract at the price defined by the curve.

• Mechanism: Price increases as supply grows (typically); early buyers benefit.
• Common Use: Continuous token models and liquidity bootstrapping pools (LBPs).
• Contrast: Provides continuous liquidity vs. the discrete, time-bound events of an auction.