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Auctions Module

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Overview​

The Auctions Module provides a flexible infrastructure for running sealed-bid, second-price auctions and their variants within the Rarity protocol. This module is designed to support various auction-based mechanisms where privacy may be critical to prevent information leakage before reveal and settlement phases.

Why auction mechanisms matter​

Auctions serve as powerful price discovery and allocation mechanisms, particularly valuable for:

  • Rare asset acquisition: Determining fair value for unique items without comparable markets
  • Collection wind-down: Transparent, fair distribution of assets when collections need to be liquidated
  • Limited token offerings: Efficient allocation of scarce resources to those who value them most
  • Secondary market coordination: Coordinating large block trades without market impact

Core auction types​

The Auctions Module supports several auction formats, each suited to different use cases:

Sealed-bid auctions​

Participants submit bids privately without knowledge of other bids. All bids are revealed simultaneously, preventing strategic gaming and ensuring honest valuation.

Second-price (Vickrey) auctions​

Winners pay the second-highest bid rather than their own bid, incentivizing truthful bidding and efficient allocation.

Dutch auctions​

Open descending-price auctions where the price starts high and decreases over time. Buyers compete on timing rather than strategic bidding, with transparent real-time price discovery.

Privacy-preserving variants​

Advanced cryptographic techniques enable auctions where even bid amounts remain private until reveal, protecting sensitive information about participant valuations.

While the Auctions Module provides general auction infrastructure, the protocol uses specialized auction mechanisms elsewhere:

Next sections​

Explore specific auction types and their implementations:

  • Sealed-bid auctions: How private bidding works
  • Second-price auctions: Incentive-compatible bidding
  • Dutch auctions: Transparent descending-price mechanisms
  • Privacy considerations: Cryptographic techniques for sensitive auctions