Vickrey

What's a vickrey auction?

A Vickrey auction is a sealed-bid auction where bidders submit their bids without knowing the bids of the others, and the highest bidder wins but pays the price of the second-highest bid. This encourages bidders to bid their true value since they'll only have to pay the next highest bid, not their own maximum.

Exploring Vickrey Auctions: A Mathematical Approach to Fair Pricing

Optimizing Auction Strategies: In the realm of mathematics, auctions are a fascinating subject, and Vickrey auctions stand out for their ability to determine an item's fair price, particularly in single auction scenarios. When venturing into new systems, such as the NFT marketplace, it's vital to consider these advancements. Why adhere to traditional auction methods when we can harness the progress made in auction theory?

Vickrey vs. English Auctions: Traditional English auctions often lead to the winner overpaying, a situation exacerbated by on-chain bidding, where the incentive to avoid extra gas fees can result in significantly higher bids. This not only leads to buyer's regret but also negatively impacts the NFT market. Vickrey auctions address this by eliminating the risk of overpayment.

Enhancing User Experience with Vickrey Auctions

Simplifying the Bidding Process: Other platforms necessitate active participation from bidders until an auction concludes, which can be inconvenient and time-consuming. The optimal strategy in these auctions is to bid at the last moment, prolonging the process. Vickrey auctions streamline this by allowing immediate bidding without the need to monitor the auction constantly. This approach respects users' time and commitments, contrasting sharply with platforms that require constant attention.

Economic Efficiency: High bidding costs mean less revenue for artists. By reducing these costs, our system ensures more funds are directed towards the creators. For instance, lowering the cost from 0.05 ETH to 0.02 ETH means a higher final payout for the artist, maintaining the same end price for the buyer.

Potential for more sales at lower prices: Since vickrey auctions allow anyone to to have the opportunity to place a bid without revealing their bid and because bids aren't required to be greater than another persons - anyone can take their shot at winning an auction. We believe lower reserves will create a higher volume of sales which may provide artists with more sustainable profits over shorter periodsm instead of waiting 11months for a high reserve English auction.

Our System: Solving Industry Challenges

No Time-Bound On-Chain Actions: Our system is designed to mitigate the impact of gas spikes during auctions. By limiting on-chain actions to just listing and settling, which can be done at any time, we eliminate the rush and high costs associated with gas spikes. All other actions, like bidding, are off-chain, making the process more efficient and cost-effective.

Cost-Effective Listings: Listing on our platform is significantly cheaper (3-4 times less) than on others, like Foundation. This affordability is key to attracting more artists and collectors.

Innovative Bidding and Listing Solutions: Our gasless English auctions and scheduled bids address the issue of prolonged auction durations and the inconvenience of having to be physically present to bid. This convenience is paramount in providing a user-friendly experience.

Novelty in Sealed Deposits: Our system's approach to sealed deposits is groundbreaking. Using counterfactual contract creation, we can mask deposits among regular ETH transfers – a technique not previously utilized in the market. This innovation is part of our commitment to enhancing user experience and security.

Custody-Free Transactions: A cornerstone of our platform is the assurance that we never take custody of funds. This ensures a trust-based environment where users feel secure in their transactions.

Conclusion: More Than Just a Marketplace

Sealed is not just another NFT marketplace; our goal is to drive innovation and improve the overall space. By addressing key issues with auction systems and implementing novel solutions, we are setting new standards in the NFT world.