Auction will sell asset that was seized through liquidation in the following format:
- Price will start high and then it'll decrease over time, which is determined by price calculator functions
- User can place a bid to ensure that they will get the amount of asset at the price they want
- User can also use
buyItNowto buy the asset at current price (determined by price calculator).
- Bids will be given priority over
buyItNowif there current price less than 103% of the bid price. i.e if there are x lot and bid price is $100 and current price is $102,
buyItNowwill no longer be possible.
When the auction starts, the start price of the asset set to 120% of current asset price fetched from FTSO (this variable is switchable) to ensure that the the optimal price is achieved for the asset.
Price calculators calculates the current sale price based on time elapsed, start time. In the future versions, this can include other variables such as amount of asset within a period of time, whether there are enough bids to cover the debt position, other signals from 3rd party data providers, etc...
Bidding allows user to try and buy the asset at a specific price for the specified amount of lot. When a bid is placed, the user will need to lock in the entire payment and when the price (set by the price calculator) drops below the the bid price, user will be able to finalize the sale and get the asset.
There are a few benefits to bidding, the main one being the next bidder for the same lot will need to place at least 3% higher than current bid. if the sale price drops to below 103%, you will be able to finalize the sale and get the asset.
Note: in the future version, we are considering adding a functionality where if there are enough bids to fully cover the debt position, the price calculator will drop faster. Hopefully this will add an extra incentive to act faster.
Since having funds stuck in a bid is not ideal for people who wishes to arbitrage, there is another way to purchase the asset and received it in one transaction. Buy it now functionality allow the buyer to pay the current price returned by the price calculator and received the asset directly. This is only available if there are not enough bids at the current price.