For the past nine months, Axis has been developing its decentralized auction protocol behind closed doors. While this has allowed us to build with focus, it has also created friction for developers, teams, and projects looking to integrate our contracts.

Today, we’re introducing the Open Auction Initiative — a major step toward making Axis fully open and accessible to builders, developers, and teams who want to integrate advanced auction mechanics into their applications.

Applications vs. Protocols​

Recent successes in the fundraising space highlight two dominant approaches to building applications for capital formation:

Platform-centric approaches like Legion provide a curated end-to-end application experience while owning the user base.

Lead-centric approaches like Echo empower dealmakers to bring their own audience, leveraging the application while maintaining independence.

What makes Axis different? Instead of building a monolithic fundraising app, Axis is a protocol — a set of smart contracts that anyone can integrate to launch auction-driven applications. This design choice is powerful but has also posed challenges:

• Harder for developers to experiment – builders couldn’t easily prototype or contribute
• Difficult to showcase integrations – teams needed clearer pathways to plug into Axis
• Slower user growth – adoption stalled compared to more user-facing applications

The Open Auction Initiative addresses these challenges by making Axis more open, modular, and developer-friendly.

What We're Changing​

By open sourcing our codebase, we're making it easier than ever for developers and projects to build on top of Axis. Specifically, this initiative will:

✅ Make our contracts more accessible with clear documentation and a modular SDK
✅ Provide open-source UI components to let teams move faster without starting from scratch
✅ Open key infrastructure pieces to access critical data and key management solutions
✅ Encourage a community of contributors who can extend and refine Axis-powered auctions

Standalone UI​

One of the biggest unlocks in the Open Auction Initiative is the release of the Axis Standalone UI.

This new repository provides a miniature, fully customizable version of an Axis-powered auction application, allowing projects to:

• Easily deploy their own TGE interface without needing to build from scratch
• Customize branding, parameters, and auction logic while leveraging the Axis protocol
• Host the UI directly on their own domain, giving teams full control over their fundraising experience

The Standalone UI lowers the barrier for projects to launch their own TGEs, ensuring seamless integration with Axis’s permissionless auction contracts.

Axis SDK​

Alongside the Standalone UI, Axis has also been developing and improving its public SDK — a set of tools that enables seamless interaction with our contracts. With this, developers can:

• Deploy and configure auction mechanisms
• Plug into existing bid submission flows
• Customize auction mechanisms to fit different token models

With the Open Auction Initiative, we’re doubling down on this SDK as the foundation for all Axis integrations – including the Standalone UI.

The result? Faster, more flexible applications built on top of Axis.

An Open Future for Onchain Capital Formation​

The future of token launches and price discovery is modular, decentralized, and composable. Axis isn’t just another fundraising platform — it’s an open protocol for auctions, ready for anyone to leverage.

The Open Auction Initiative is the next phase of this journey. Whether you’re building a new fundraising mechanism or experimenting with novel tokenomics, we invite you to build with us.

Explore the Standalone UI: https://github.com/Axis-Fi/standalone-ui
Start integrating the SDK: https://github.com/Axis-Fi/ui-libs
Join the discussion: https://discord.gg/tx9CrvPZWF

Following MindPalace's successful launch, we're excited to announce FlappyETH as the next project leveraging Axis' programmatic launch solutions in partnership with Baseline. This launch represents a perfect synthesis of autonomous gaming and programmable tokenomics, showcasing the versatility of Baseline tokens on Blast.

Introducing FlappyETH​

FlappyETH reimagines Play-to-Earn through full autonomy - where every aspect from gameplay to rewards distribution is managed by smart contracts. No administrators, no manual interventions, just pure algorithmic execution. Players compete in 30-minute rounds for ETH rewards, with the top 5 scores eligible for prizes that are automatically distributed through the protocol.

Autonomous Gaming​

The system's architecture eliminates traditional P2E pain points through several key innovations:

• Wallet-Signed Scores: Each gameplay session requires cryptographic signatures, ensuring legitimate competition and preventing automated exploitation
• Smart Contract Prize Pool: ETH rewards are managed programmatically, with automatic rollovers for unclaimed prizes
• Token-Gated Access: Holding 2,000 $FLAPPY tokens enables participation, creating natural demand pressure
• Anti-Bot Measures: Limited attempts per round and unique signature requirements maintain competitive integrity

Enhanced Market Making​

FlappyETH will launch with Baseline's latest market making improvements, designed to enable more dynamic price discovery while maintaining their signature protected floor mechanics. The new system features:

• Optimized Liquidity Depth: More efficient capital utilization enables responsive price action
• Logarithmic Scaling: Liquidity depth grows proportionally with market cap, balancing accessibility with stability
• Enhanced Price Discovery: Streamlined market making enables more organic trading patterns

For active players, this means a more engaging token economy where gameplay success can meaningfully impact market dynamics. The system's automated borrowing features allow players to access liquidity without sacrificing their governance power or gameplay access.

Launch Details​

The $FLAPPY token launch will take place on December 3, 2024. The launch will utilize Fixed-Price Sale contracts with Baseline Direct-to-Liquidity integration, ensuring programmatic initialization of Baseline's automated market making system. 1M tokens will be available at a fixed-price of 0.000015 $wETH (~$0.05 per token).

Launch parameters and eligibility requirements will be announced through our official channels. Interested participants can:

• Follow @playflappyeth on Twitter for launch updates
• Join their Discord for sneak peaks
• Visit FlappyETH.com for documentation & FAQs

Stay tuned for additional details about participation requirements and token distribution mechanisms.

Prepare for a pivotal moment in the evolution of Axis - the first Baseline token to launch directly through our programmatic launchpad. As we expand the scope of unruggable liquidity on Blast, we’re proud to announce MindPalace as our latest launch partner.

Introducing MindPalace​

MindPalace is creating the world's first self-generating metaverse, where users can create digital immortal copies of themselves. By leveraging cutting-edge AI technology, MindPalace enables individuals to upload their digital footprint — from social media posts to personal communications — to generate AI agents that think, behave, and interact exactly like their human counterparts.

Within Babylon, MindPalace's revolutionary metaverse, these AI agents engage in daily routines, form relationships, and even compete in weekly tournaments. The platform extends beyond simple simulation, creating a living, breathing digital world where your digital copy continues to learn, reflect, and evolve independently.

Baseline Primer​

As a Baseline token, $AI incorporates innovative tokenomics designed for sustainable growth and value preservation.

Baseline Value BLV represents the guaranteed minimum price of $AI, backed by reserved liquidity in Baseline’s unique liquidity pool. MindPalace’s protocol-owned liquidity will be managed by smart contracts built on top of Thruster’s Concentrated Liquidity AMM. Trading $AI creates a rising price floor, because, with each trade, a small liquidity surplus is accrued and added to the floor.

Automated Market Making $AI will feature Baseline’s built-in market making capabilities, enabling efficient price discovery and deep liquidity from day one. The key difference between Baseline and traditional market-making strategies is that Baseline aims to maximize value for token holders. It does this by providing deep liquidity on the buy side to create a rising floor price and continuous liquidity on the sell side for constant price discovery.

Afterburner MindPalace will launch with Baseline’s leveraged buyback system - the Afterburner. Operating directly in the open market, the system randomizes execution and scales buybacks based on market conditions. This provides continuous support for the $AI post-launch through automated buybacks, creating consistent demand pressure.

See Baseline’s documentation for more details.

Launch Details​

The $AI token launch will take place on October 25, 2024 at 15:00 UTC. During this period, 5M tokens will be available at a fixed-price of 0.000004 $wETH (~$0.01 per token). An additional 5M tokens will be distributed to MindPalace NFT holders using proceeds from the genesis mint.

Eligibility To qualify for the presale, participants must hold a minimum of 100 $YES prior to the launch snapshot. The launch will be first-come first-served with a 0.1 $wETH max buy-in per wallet.

Curator We are excited to have Baseline as a premier curator on Axis for new bToken launches. Their programmatic liquidity and advanced tokenomics design complement our automated launch solutions.

In the past few months we've made significant strides, launching Axis on several Layer 2s and establishing strong proof points for token launches using our auction infrastructure. While there's much to celebrate, we’re even more excited about the upcoming news on the horizon. But before we dive into what’s next, it's worth taking a moment to reflect on the journey that brought us here.

The Beginning — Bond Protocol​

Our story began in October 2022 with the launch of Bond Protocol, a permissionless product suite designed to optimize DAO treasuries through its unique bond offering. Using bonds, protocols are able to acquire new assets by issuing vested tokens at a discount to market price. The protocol introduced a variety of bond types, each using different auction mechanisms and vesting types to meet diverse needs.

At the time, our mission was to solve two critical challenges:

• Limited treasury diversification options: Projects looking to diversify or acquire assets had to rely on open markets, where slippage and price impact posed significant challenges — especially when involving native tokens with low liquidity.
• Inefficient token distribution: Many projects distributed large portions of their token supply to incentivize usage or liquidity provisioning, but these traditional methods often led to misaligned incentives and mercenary capital. This birthed the narrative for Protocol-Owned-Liquidity, a strategy that Bond Protocol helped enable and is still widely used amongst DeFi protocols.

Bond Protocol successfully helped raise over $200M for various protocols. While we remain confident in its value proposition, we saw a broader opportunity: auctions in DeFi could go far beyond treasury management. On-chain capital formation is a largely untapped space in need of better solutions, and innovation has been slow to meet that demand. This led to the creation of Axis.

The Next Chapter — Axis​

Axis is a reinvention of our previous work with Bond Protocol. Built with an entirely new protocol architecture, Axis unlocks limitless possibilities for auction types, token derivatives, and use cases. We designed it to be a permissionless, modular platform that gives builders the freedom to create and customize every aspect of their auctions. And for those who have supported us since Bond Protocol, we have exciting news ahead about how you'll be able to participate in the Axis ecosystem.

More information on our system architecture and what it unlocks can be found here.

Our First Mission​

The demand for advanced on-chain capital formation tools has never been higher, yet many protocols remain trapped with outdated launch solutions that suffer from PvP dynamics, limited customization, and a lack of post-launch support. The one-size-fits-all approach simply falls short for today’s crypto projects and users. Axis was built to disrupt this status quo.

Stay tuned!

We’re proud to announce the completion of the $MACHI token launch, a successful collaboration that combined Axis’ advanced auction infrastructure with Baseline’s automated tokenomics system. The total raise amount was $5 million, spread across 1,158 wallets with an average allocation of $4,331.

The Role of Axis​

Axis is a modular auction protocol that enables developers to easily build, combine, and deploy a range of auction mechanisms. Our flagship product is the first on-chain sealed-bid auction system, designed to optimize for price discovery in token launches. In this case study, our Fixed-Price Sale contracts were used alongside other tools from the Axis product suite.

The $MACHI token launch was conducted in two phases: the Community Round and the Public Round. Each phase utilized a Merkle tree whitelist to ensure that eligible participants had specific bidding caps, all made possible through Axis’ advanced callback system.

Throughout the event, $5 million in USDB bids were securely managed via our Fixed-Price Sale contracts. Upon settlement, 80% of the auction proceeds were automatically deployed into pre-configured liquidity pool ranges using a custom Direct-to-Liquidity callback, built specifically for Baseline markets.

Finally, $MACHI tokens were distributed directly to participants in bulk. No off-chain processes or manual oversight were required. Every step was executed exactly as described, removing any extra trust assumptions from users.

Baseline’s Role​

Baseline is a DeFi protocol that redefines tokenomics through programmable assets known as bTokens. These tokens come with built-in protections and dynamic liquidity management to ensure price stability and long-term growth.

The key to Baseline's system is the Baseline Value (BLV), which is the guaranteed minimum price. Every time a bToken is traded, a portion of liquidity is autonomously reserved to back the BLV. This gives token holders a safety net, minimizing their downside risk while keeping upside potential open. As trading continues, the BLV gradually rises, creating a floor price that appreciates over time and rewards holders. The more trading activity there is, the more liquidity accumulates, which in turn strengthens the BLV.

bTokens also have other features like market-driven token issuance, loans and loops, and an automated buyback mechanism known as the Afterburner, which continuously supports the token’s market premium above the BLV. The Afterburner uses surplus liquidity generated from Baseline’s protocol operations, such as trading fees, to fund periodic buybacks. The system operates at all times, with buyback attempts occurring every 10-15 minutes.

Closing Thoughts​

We’re ecstatic to have the $MACHI token launch as a strong proof point for our auction infrastructure in combination with cutting-edge protocols like Baseline. With $5 million raised, the entire process from whitelisting to liquidity deployment was executed seamlessly. As we continue to refine and expand our platform, we look forward to powering more projects like MACHI that are pushing the boundaries of tokenomics and capital formation.

Now that Machi’s Baseline market is live, we're excited to see the full impact of their system during the price discovery phase. Their approach to liquidity management and automated tokenomics is set to be a game changer.

For projects looking to take part in next-generation token launches, Axis provides the tools to make it happen. Get in touch here.

Vesting is arguably the most crucial element in designing a protocol’s tokenomics, which is why it’s a standard for ensuring long-term commitment from early investors, team members, and even public sale participants. On Axis, we’ve built functionality to support token vesting, giving sellers the flexibility to structure their auctions in ways that align with their overall roadmap. However, it’s essential to use these tools strategically to ensure a successful token launch.

Built-In Functionality for Token Vesting​

Axis provides built-in support for token vesting through our linear vesting module, which allows sellers to configure vesting schedules at auction creation. When an auction is deployed with vesting terms and users win their bids, the system mints an ERC6909 NFT to represent their claim on the vesting tokens. This NFT continuously releases tokens to the holder over the vesting period.

Sellers can define both a start and end time for the vesting schedule. The token balance is then released evenly over this period. It’s important to note that if the start time functions as a cliff, no tokens will be vested until that specific time is reached.

While Axis currently supports only linear vesting tokens, we’ve designed the protocol to be modular, meaning sellers can integrate third-party solutions like Sablier, Superfluid, LlamaPay or Hedgey for more complex vesting needs.

When to Use Vesting Tokens​

Vesting can be a powerful tool for aligning incentives, but sellers must apply them appropriately based on the auction mechanism being used.

Fixed-Price Sales are typically the best fit for vesting tokens. In these sales, participants purchase tokens at a predetermined price set by the seller, and vesting can help align long-term incentives by gradually distributing the tokens. This approach ensures that buyers are committed to the project’s success over time, reducing the likelihood of immediate sell-offs that could harm the token’s price stability. There are countless examples of extreme price drops once there is token liquidity and price discovery, illustrating the need for vesting in Fixed-Price Sales.

Sealed-Bid Auctions, on the other hand, are designed to optimize price discovery by allowing users to place private, encrypted bids. The core value of this mechanism lies in its ability to discover the genuine market price of a token. Auctions give early token holders that ability to acquire tokens at a uniform price, instead of the PvP dynamics seen when purchasing from a liquidity pool.. To preserve this functionality, tokens distributed through Sealed-Bid Auctions should be immediately liquid. Imposing vesting terms on a Sealed-Bid Auction can undermine the auction’s primary objective by introducing additional barriers to discovering a token’s market-clearing price.

Best Practices for Sellers​

To maximize the success of your token launch on Axis, consider the following best practices:

1. If you choose to implement vesting, make sure the terms are clearly communicated and reasonable for your community.
2. Avoid overly long or restrictive vesting periods that could discourage participation.
3. Showcase the Vesting NFT to provide additional transparency for participants. This feature ensures that token holders can track their vested tokens in real-time.
4. If your project requires more complex vesting schedules, consider integrating third-party or custom solutions to tailor the vesting process to your needs.
5. Ask your Curator for feedback!

In this AMA we’re joined by Kirk, the Business Development Lead at Revelo Intel. We dive deep into what Revelo is, their product offering, their value-add on Axis as Curators, and more. The full AMA can be found here.

Revelo Intel Resources:

• Website
• Twitter
• Newsletter
• Youtube/Podcast

What does Revelo Intel do?​

Revelo Intel serves two main groups: consumers and protocols. For consumers, we provide very efficient due diligence tools, helping investors understand the risks, product functionalities, and business models behind protocols. We've been fortunate to accumulate nearly 9,000 sophisticated DeFi investors since early 2023. On the protocol side, we help businesses reach their ideal users through curated educational content, effectively marketing themselves and getting their brand exposed to our user base.

What products and services does Revelo Intel offer?​

Our flagship product is the Project Breakdown, which consolidates all available information about a protocol into an easily digestible format, kind of like a public documentation pumped full of steroids. We also produce narrative-driven pieces that discuss industry trends and opportunities. Our platform offers both free and paid memberships. Free users get access to high-quality reports, while paid members get more intimate access to our team, including direct interaction with the analysts who wrote the reports and access to our NFT-gated venture syndicate, Revelo Ventures.

What are the benefits of the paid memberships at Revelo Intel?​

Paid members get direct access to our analysts through our Discord, where they can ask questions about specific protocols or reports. They also gain access to Revelo Ventures, our NFT-gated venture syndicate, which provides deal flow and investment opportunities at the same terms and valuations as Revelo Intel itself.

What is your role as a curator for Axis?​

As curators, we focus on five key elements:

1. Transparency: Clearly explaining how protocols work, without fluff pieces to ensure transparency and honesty.
2. Economic Opportunity: Assessing the economic potential and sustainability of the protocol, including where fees and yields come from.
3. Tokenomics: Outlining token supply, emissions, vesting schedules, and other relevant details.
4. Team Assessment: Evaluating the team’s track record, whether doxxed, semi-doxxed, or anonymous, and ensuring credibility.
5. Risk Assessment: Highlighting economic and technical risks, including audit details and any associated peg risks for stablecoins or synthetic assets.

Can you talk about the first launch partner?​

Our first launch partner is Aurelius Finance, previously known as the Byte Masons, who are the team behind Reaper Farm. Aurelius combines a CDP platform like Liquity with an Aave V2 lending market, allowing users to deposit assets and get a stablecoin called AUSD. Their rehypothecation engine automatically lends out the collateral to earn yield, making the loans essentially interest-free.

How did Revelo Intel get in touch with Aurelius Finance and Axis?​

Our relationship with the Aurelius team goes way back to when they were still known as the Byte Masons. We were already familiar with their work on Reaper Farm, so when we heard they were coming through Axis for the TGE, it seemed like a perfect fit for us to test out the platform with a project we knew well.

Why is Mantle a good fit for Aurelius and Axis?​

Mantle network is ideal for Axis' sealed bid batch auction system due to its suitability for L2 environments where encryption and decryption of bids can be costly. This partnership will allow both Aurelius and Axis to leverage the benefits of the L2 ecosystem effectively.

Can you explain how fees work on Axis?​

On Axis, curator fees and referral fees are aligned with the project being launched. Curators are paid in the project tokens they are launching, aligning their incentives with the project's success. Referral links can be configured to act as decentralized marketing funnels, providing exposure when the project goes live.

After extensive development since the start of 2024, we’re excited to announce that Axis is officially live. Among the many missions we set out to accomplish, below is what best recaps our journey so far:

• Create a Modular Infrastructure Layer for Auction Development and Deployment: Axis is the first permissionless platform for developers to build auction-driven applications by combining various modules. Auctions are the backbone of many critical use cases in crypto, and we believe there’s potential to push these boundaries even further. More details on how developers can get involved will be shared soon.

• Showcase Auction-Driven Mechanisms: We’re bringing sealed-bid auctions on-chain to optimize for price discovery, addressing a recurring pain point in our industry. Our journey to this point, including the complexities of on-chain auctions, why we see bidder privacy as a major unlock, and our exploration of various implementations, is documented here.

Introducing the Axis dApp​

Our first native dApp is designed to power next generation token launches, and will be up and running with the following features:

Sealed-Bid Auctions (Token Distribution)​

A sealed-bid auction system that ensures true price discovery by allowing users to place private and encrypted bids, eliminating PvP dynamics. Sealed-Bid Auctions allocate tokens to the highest bidders, with the clearing price set by the last successful bid to be filled. Learn more about the underlying mechanics.

Fixed-Price Sales (Token Distribution)​

Fixed-Price Sales are a straightforward mechanism that allows participants to purchase tokens at a set price on a first-come, first-served basis. Although not new to crypto, our implementation enhances the UX for buyers and offers greater configurability for sellers. We expect it to serve as the first step in a multi-phase token launch.

Vesting Tokens (Advanced Auction Feature)​

Sellers have the option to add vesting terms for token launch participants. This means after an auction ends, winning bidders will need to wait a pre-specified duration before claiming the underlying payout tokens. Currently, Axis only supports linear vesting tokens.

Direct-to-Liquidity (Advanced Auction Feature)​

If implemented by sellers, a liquidity pool will instantly be seeded with all of or a portion of auction proceeds, providing a layer of programmatic security for token launch participants. More info on how this protects users here.

Allowlists (Advanced Auction Feature)​

If implemented by sellers, access to a token launch will be gated for a specific group of addresses. Typically used for Fixed-Price Sales to reward early adopters or community members.

Supported Networks, Bidding Tokens, and Contract Addresses​

Axis is initially deployed on several Ethereum Layer 2 networks with support for various bidding tokens. L2s provide a better user experience with low gas fees and quicker confirmation times for transactions, which is important in a fast-paced auction application. All contract addresses can be found here.

• Arbitrum | WETH, USDC, USDT, DAI
• Blast | WETH, USDB
• Base | WETH, USDC
• Mantle | WETH, USDC, USDT
• Mode | WETH, USDC, USDT

Axis Fees Explained​

Protocol Fees​

Axis has a protocol fee for each auction type, denominated in the quote token. At launch, fees for all auction types are set at 0%. Axis will be a community-owned platform, and governance will have the ability to adjust this in the future.

Referral Fees​

Axis implements a referral program at the smart contract level to connect auctions with bidders, acting as a decentralized marketing fee accessible to anyone who promotes and directs traffic to specific auctions. This fee can be set by the seller for each auction, denominated in the quote token.

The more winning bids or total auction value directed through your links, the more you earn. Instructions for creating referral links can be found here.

Curator Fees​

Curators play a crucial role by vetting and showcasing token launches on Axis. While the value-add per curator can vary, whether an auction is curated is an important consideration for token launch participants.

An auction owner can set a curator that can be compensated for the performance of that auction. Unlike the protocol and referrer fees, the curator fee is denominated in the payout token. Curators receive the same asset as buyers so their incentives are aligned.

How to Get Started​

For Users​

To help you get started, we have comprehensive guides in our documentation. These include overviews of each auction mechanism, advanced features, how to use the dApp, and what to expect during each stage of a token launch.

In the meantime, follow us on Twitter or join the community for more details about the upcoming token launches on Origin!

For Projects and Curators​

The Axis Protocol is permissionless, allowing anyone to issue auctions by directly interacting with the smart contracts. We have built our dApp on top of the Axis Protocol to provide a seamless experience for token launches. However, only auctions supported by approved curators will be displayed on the application to give users confidence.

If you’re interested becoming a launch partner or a curator, check out the resources below:

• Axis One Pager
• Curator One Pager
• The Importance of Bidder Privacy
• Introducing and Solving the Token Launch Trilemma
• Contact the Axis Team

We’re excited to introduce Revelo Intel as the first Curator for Axis! With their deep expertise in crypto research and education, Revelo is perfectly positioned to curate the first-ever token launch using Sealed-Bid Auctions.

About Axis​

Our dApp is a next-gen token launch platform that employs a combination of auction-driven mechanisms. Our flagship product, Sealed-Bid Auctions, introduces the first on-chain sealed-bid system, ensuring true price discovery by allowing users to place private and encrypted bids. This advanced technology requires insights from the industry’s best, making the role of a curator pivotal. Curators vet and showcase these auctions, ensuring they meet high standards and offer transparency to participants.

Why Revelo Intel?​

Revelo Intel, launched in September 2022, is a leading crypto research platform dedicated to addressing information fragmentation in the crypto space. By offering a comprehensive suite of products, Revelo Intel empowers users to make well-informed decisions.

Their commitment to unbiased research and clear communication aligns perfectly with what users need for the first Sealed-Bid Auction launch. Revelo Intel’s track record proves they can be a trusted source of information, while their experience in creating educational content ensures complex auction details are effectively communicated to all participants.

Get to Know Revelo Intel's Offerings​

Revelo Intel offers a range of products to cater to different needs:

Owl (Free)​

• Platform Access: Navigate and explore research on a custom-built platform.
• Daily Bolt Newsletter: Receive curated content directly to your inbox daily.
• Daily Intel Telegram: Stay informed with daily blasts of significant events.
• Industry Intels (Limited): Narrative-driven reports including their insights, positive/negative catalysts, and risks.
• Breakdowns (Limited): 50+ page reports over individual projects
• Notes (Limited): Get analyst summaries of key podcasts, AMAs, and interviews.

Eagle ($149 Monthly)​

• Includes everything in Owl, plus:
• Industry Intels (1-2/week)
• Breakdowns (1-2/week)
• Revelo Discord: Join a private, members-only Discord for discussions and research sharing.
• Notes (50+/Month)
• News Feed & Email Notifications (10 Tags): Follow certain topics to curate a personal feed.

Join Us in Welcoming Revelo Intel​

We are thrilled to have Revelo Intel as our first curator and look forward to the valuable insights and transparency they will bring to our platform.

For more information, visit their website or join our Discord for any questions!

Introduction​

Auctions have been a cornerstone of economic transactions for centuries because they reliably facilitate price discovery for illiquid assets. This holds true in DeFi, where auctions already help secure and manage billions of dollars across various use cases. However, existing token launch strategies, which typically use traditional auctions or mechanisms with auction-like features, operate in open bidding environments that come with significant tradeoffs. These open formats can alter bidder behavior and negatively impact price discovery — arguably the most important outcome.

Some strategies lead to projects launching at predatory valuations, others create PvP dynamics among participants, or both issues occur simultaneously. Consequently, we often see charts turning red post-launch followed by extreme volatility, which is not ideal for both buyers or sellers. To address these issues we built Origin’s flagship product, Sealed-Bid Auctions. This sealed-bid batch auction system excels in accurate price discovery through bidder privacy.

Examining Open Auction Formats​

Open auction formats have a tendency to lead to FOMO launches, where the visibility of other participants’ behavior leads to a surge in demand as participants ape in. This was certainly the case for early auction formats on Ethereum such as the notable Gnosis sale. The Dutch auction was designed for tokens to grow less expensive over time, encouraging participants to purchase later in the auction. However, the sale did not go as planned due to a max cap at $12.5m that skewed the bidding incentives. Instead of gradual buying, the auction ended in less than 15 minutes as bidders rushed in and filled the capacity of the auction. This resulted in only 5% of the tokens being sold while still raising 250k ETH.

To address the shortcomings of the original $GNO launch, Gnosis introduced a batch auction system where tokens are allocated to bidders starting high to low by price with the clearing price set by the last successful bid. However, the lack of bidder privacy in this system results in inherent PvP dynamics. As bids are visible to all participants, the optimal strategy becomes waiting until the end of the auction to marginally outbid the last successful bid. This gives other participants an unfair advantage, undermining the auction's fairness and preventing true price discovery.

Liquidity Bootstrapping Pools (LBPs) aim to address some of these issues by implementing a dynamic pricing model that adjusts based on supply and demand. Initially, the token price is set high and gradually decreases as the weight of the token in the pool is reduced over time. However, LBPs still face challenges with PvP dynamics due to information asymmetry among participants. More informed participants can time their purchases to exploit price fluctuations, while less informed participants often buy in regardless of the current price to avoid missing out. This behavior leads to tokens launching at predatory valuations as the initial price is driven up excessively.

Sealed-Bid Auctions​

For liquid tokens, price discovery naturally occurs due to factors like project track record, previous trading activity, and available liquidity. However, for illiquid assets like newly launched tokens, determining the correct market price is more challenging since these tokens are at the start of their lifecycle. Participants must determine a fair valuation on their own, making it essential for the auction structure and rules to facilitate price discovery by providing an environment where they can place bids at their true valuation.

Sealed-bid auctions offer a robust solution to these challenges as all bids are submitted privately and are not revealed until the auction ends. No peeking, no sniping, no unfair advantages — participants must submit honest bids. Real world use cases help paint the picture:

• 195,000 BTC seized from the Silk Road Marketplace has been sold by the U.S. Marshals Service using sealed-bid auctions.
• The IRS uses sealed-bid auctions to liquidate seized property.
• Government contracts are sold using sealed-bid auctions.
• Real estate and automobiles are often sold using sealed-bid auctions.
• U.S. Treasury Bills are sold using sealed-bid auctions.

Origin's Sealed-Bid Implementation​

Origin’s Sealed-Bid Auctions are designed to address the inherent challenges of token launches by leveraging bidder privacy. While we won’t cover technical specs in detail in this post, it’s important to understand its characteristics:

• Multi-unit: Multiple identical items auctioned simultaneously.
• Batch: Bids are grouped together and settled at the end of the auction.
• Encrypted: Participants’ bids are sealed and not visible to others.
• Marginal Price: All winning bids pay the price of the last, marginal bid included.

The process begins with participants submitting their bids privately. These bids are encrypted and stored via a hybrid encryption scheme called ECIES until the auction ends. Once the auction ends, bids are decrypted and sorted high to low by price to determine the clearing price. Tokens are allocated starting from the highest bid down until the total capacity is expended, and the last bid to fill the capacity sets the clearing price (i.e. the uniform price that all winning bidders pay). Users that bid above the clearing price will receive more tokens than their initial bid amount, while anyone below this clearing price will not receive tokens and be able to claim a refund.

Closing Thoughts​

Sealed-Bid Auctions ensure that participants can submit honest bids based on their true valuations, resulting in price discovery that reflects genuine market demand. As blockchain infrastructure evolves, the possibilities for privacy-preserving auction mechanisms like Sealed-Bid Auctions are endless. If you’re interested in launching on Origin, we invite you to apply here or try out Sealed-Bid Auctions on testnet.