How will the LAND auction work?
An explanation of Dutch auctions, and why we’re using one to distribute remaining unowned LAND
The LAND auction will begin the second week of December, and it will last 15 days.
In our last blog post, we explained the second auction will take the form of a Dutch auction. We want to take a little time to explain exactly what that means, and why we think a Dutch auction is the best way to distribute Genesis City’s remaining LAND.
What are Dutch auctions?
A Dutch auction is a type of auction in which the item or items being sold are set at an initially high price. The price is then incrementally lowered at a predetermined rate.
Anyone participating in the auction simply purchases the item whenever it reaches a price they accept. There is no bidding, or “bid wars” in Dutch auctions.
Eventually, any unsold items are reduced in price until they reach a predetermined reserve price, where they will sit until they are purchased or the auction ends.
This is different from traditional auctions, in which the price gradually increases as individuals make bids, competing against each other, or a timer, until someone “wins” the item.
How will Decentraland’s Dutch auction work?
On the first day of the auction, all remaining 9,300 unowned LAND parcels will be set at a starting price of 200,000 MANA. This price will then drop at a non-linear rate as follows:
- Throughout the first day, the price will drop a total of 100,000 MANA.
- Throughout the second day, the price will drop a total of 50,000 MANA.
- From the third day through the eighth day, the price will drop a total of 5,000 MANA per day.
From the ninth day through the end of the auction, the price will drop 3,000 MANA per day until a final price of 1,000 MANA is reached.
To make this decrease in price as smooth as possible, the price will lower every second.
The changes in the rate will occur at the intervals listed above to prevent any sharp changes in price. You will see a gradual decrease in price, at a gradually decreasing rate.
Why use a Dutch auction?
There are two primary reasons for using a Dutch auction:
First, we want to provide the best possible user-experience during this auction. By removing the potential for bidding-wars, Dutch auctions make the process of buying unowned LAND simple, easy, and anxiety-free.
Second, lowering the price of all parcels at the same rate enables you to purchase multiple parcels at the same time, at the same price. You will be able to buy multiple parcels of LAND with a single transaction. This is especially useful for anyone who wants to purchase an estate, without having to pay different prices for each parcel in that estate.
Where can I learn more?
A step-by-step tutorial explaining how to use the actual LAND auction platform will be provided soon, so stay tuned!
In the meantime, if you have any questions check out the Decentraland AMA later today on Reddit.