Why Dutch Auctions?

What is a Dutch auction?

A "Dutch" auction is a format of auction where price declines over time, versus a traditional ("English") Auction format where price incrementally increases over time as participants place subsequently higher bids.

What is an "all-in Dutch auction"?

An "all-in Dutch auction" is a format of auction where price declines over time, and the dropper is NOT able to cancel the auction...unless they buy back the NFT(s).

Why DroppingNow uses all-in Dutch auctions?

  • Because they're exciting and it's a spectacle! And as NFT degens ourselves, we have a bunch of NFTs we want to drop ourselves!
  • Dutch Auctions present an opportunity for NFT buyers to find prices that appeal to them on an dynamic basis where the price keeps dropping until the right buyer is found.
  • In many cases, there is not a pre-determined "Floor" price available for an NFT collection (eg., a very old collection that doesn't have a lot of volume, a one-off item, etc). In traditional auctions, the reserve is typically set at the floor price. This hinders volume as items will not sell if the floor drops.
  • All together, Dutch Auctions create an efficient price discovery mechanism for buyers and sellers to be matched efficiently. Sellers spend less time adjusting auction reserve prices ("set it and forget it") and buyers have more opportunities to identify NFTs in their buying zone.

What pricing model does the all-in Dutch auctions (AIDA) follow?

A standard price decay curve

  • Dropping prices on DroppingNow decay using the following function:
x(t)=x0(1+r)tx(t) = x^0 * (1+r)^t
  • You can see a visualization of what the curve looks like over time below. We also display this in the application whenever you are listing an item.