Introducing the Sealed-bid Auction

Introduction

According to Investopedia: “A sealed-bid auction is a type of auction process in which all bidders simultaneously submit sealed bids to the auctioneer so that no bidder knows how much the other auction participants have bid. Traditionally, a sealed bid refers to a written bid placed in a sealed envelope. The sealed bid is not opened until the stated date, at which time all bids are opened together. The highest bidder is usually declared the winner of the bidding process.”

Sealed-bid in DeFi

I am inspired by the traditional sealed-bid auction and I am sure it has many use cases in the crypto space. Thanks to the smart contract’s contingency and automatic execution features that we are able to build a sealed-bid auction on the blockchain. Although sealed-bid auctions on Bounce have some differences from the traditional ones, I will reference as sealed-bid to show respect. The final result of a sealed-bid auction will reveal when the pool time runs out. The smart contract will automatically fill up bid orders from highest bid price ratio all the way down until the creators’ token allocations are fully filled. Now let's get to the point.

How to create a sealed-bid pool?

Anyone or organization can create sealed bid pools at any time. Sealed-bid pool creators need to decide on the more parameters than fixed-swap pool creators:

1. Pool Name
2. Token details (Contract address, decimals, etc.)
3. Auction Time
4. Participant (Public, private or BOT holders)
5. Amount of x tokens one wants to swap into ETH
6. Floor swap ratio, which is the minimum price bid offers a pool creator would accept. Bidders cannot bid below this ratio.
7. Minimum allocation per wallet (To maintain the quality of contract operation, we set a minimum allocation per wallet based on numbers you entered above. You can use this amount or enter a larger amount.)

After deciding on these variables, a pool creator can create a sealed-bid pool by sending a transaction of his tokens that he wants to swap to the bounce contract. Then magic will happen through contract execution.

For pool creators, you need to come back to check pool status page and manually claim your swapped ETH and unswapped tokens through one transaction at the end of auction.

How to participate in a sealed-bid pool?

Similar to how one would participate in a fixed swap pool, a participant needs to visit the page for the sealed-bid pool list. From there you can see all sealed-bid pools:

Similar to the fixed-swap pools, there are two pool statuses:

1. Live: the sealed-bid auction is happening and you can make bids.
2. Closed: the sealed-bid auction is finished and participants can enter and check the results of their bids.

Once you find the sealed-bid pool you want to participate, click join and you will enter the join the pool page. The page shows some information about the pool. But to participate in a sealed-bid auction, you need to not only enter the amount of ETH you would like to bid, but you also enter your bid swap ratio.

This bid swap ratio can’t be lower than the floor swap ratio. In the case shown above, one should enter a number smaller than 243. Once you enter the numbers, click go and you will send your bids transaction to the smart contract. You can make only one bid transaction in one sealed-bid pool and you can check your bid in specific pool by clicking “check your bids” button. Once a bid transaction is executed, you cannot cancel it or claim your bided ETH back during the auction time. So please think carefully before you bid. When the auction is closed, you will need to claim back your swapped tokens and unswapped ETH back with one transaction.

Daily reward for sealed-bid participants

Bids from sealed-bid auction are counted towards to daily reward calculation. Due to the speciality of sealed-bid auction type, your transactions for biding and claiming tokens will both be counted, and there are constraints of minmum 1ETH worth of transactions with pool time equal or longer than 24 hours. in this case. For example, when you bid in a pool in this cycle and you claim back your tokens (could be ETH or swapped tokens), your number of transactions will be counted as 2 for daily reward calculation.

The Sealed-Bid auction is live now! Please check out through https://bounce.finance/list/bid