The basis for this proposal is the current GA contract.
Modifications to make:
a) there is a linear declining function that defines the maximum price a bidder can bid. If a bidder can successfully submit such an order they are guaranteed to receive the to be sold tokens as bidders after them can not outbid them anymore.
b) Solvers are given permission to close an auction slightly earlier. If they can place a bid that is e.g. less than 0.3% below the current “max price” that would close the auction - the auction is closed immediately and thus an atomic payout of the sell tokens is possible.
Rational:
The closing of an auction will often create arbitrage opportunities. If this arbitrage opportunity is open for anyone most of the value that arises from the arb. opportunity will turn into MEV. In the modification, the arb opportunity should be almost completely captured by the solver. To make this profitable even for the seller the solver will need to commit to giving most of the arb opportunity to the seller. This can be achieved by giving the GA of a “protected order” in GP (an order that needs to receive the fair clearing price)
Variation:
Modification a) allows that bidders can already take out sell tokens - this is useful for very large orders. They could already claim an amount of sell token once they bid. We could allow them to claim later more once the clearing price is reached. However - it is not clear whether the additional gas costs are worth this benefit.
don’t allow early withdrawal
allow early withdrawal but this would give up claim on the clearing price
allow early withdrawal + allow withdrawal at the clearing price.
Yes, I agree that this makes sense. I don’t know how much MEV linear decreasing auctions are having, and it will depend a lot on their configuration. But even if this is not needed, then we would still enable “signed offchain orders” for GA via GP, which is a nice add-on.
The only downside is the increased complexity from my point of view.
Generally I see a big need for these kind of auction for treasury management of DAO’s
I think Gnosis Auction and GP should be different products.
From an external perspective, GPv2 (Cowswap) strikes as a product that aims to focus on the MEV problem in the context of generic token swaps.
GA is a product that aims to find fair prices, often when there is no price reference for a new asset in the market.
Though they can have some overlaps (GP batches can be a price finding mechanism, GA is MEV resistant due to batch duration), I think the complete nature of GA vs the all the moving parts of GP make them cater to different participants.
I’d recommend to try to do a final version of GA that can live with minimal intervention, so teams that have already shown interest like Yearn, Aave, and Synthetix (+ many pending IDOs).
@Rafa thanks for the input.
I generally agree! But I think there’s also some overlap thus I propose integrating the two products. I think it’s mutually beneficial.
Happy to get your view on this post as well and your opinion on the different options to achieve better execution prices for liquid-token auctions.