Using Gnosis Auction for token distribution event

Hey dear Tracer community,

After getting some positive feedback on this thread, thought we could use a more detailed explanation of the steps and parameters required to initiate an auction using Gnosis Auction.

It is recommended to initiate an auction from a Gnosis Safe which allows a multisig setup and better security. Auctions can also be initiated directly from governance modules like the Compound Governance module (if that is required, reach out for more info).

All auctions must include the following parameters:

auctioning-token refers to the token contract address of the token to be sold in the auction

bidding-token refers to the token contract address of the token that bidders will use to bid on the auctioned token

sell-amount refers to the maximum amount of tokens that will be available for sale

min-buy-amount refers to the minimum amount of buy tokens you are willing to accept.
The minimum sell price of the auction is calculated by dividing: min-buy-amount / sell-amount
For example, selling 10 ETH for minimum buy amount of $20k will result in $2k minimum price.

auction-end-date determines the end date and time of the auction

Additional Parameters

Additionally, Auctioneers can further customize the auction by using the following optional parameters:

min-funding-threshold The minimal funding threshold for executing the settlement. If funding is not reached, everyone will get back their investment. Default is 0.

order-cancellation-date The time until which orders can be canceled. Default is 0.

min-buy-amount-per-order Describes the minimal buyAmount per order placed in the auction. Auctioneers can define if there is minimum order size in their auction. Default is 0.01

atomic-closure This parameter enables users to close the auction atomically and submit a final bid by calling the settleAuctionAtomically function in the smart contract once the auction-end-date has been reached. The auctioneer determines whether this parameter is on or off by specifying True or False.
This makes sense mainly for tokens with existing liquidity sources and is less suitable for IDOs.

allow-list-manager If an Allow-Listing should be applied for the auction – only approved addresses are allowed to participate, the auctioneer can provide their own allowlistManager contract, or use the AllowListOffChainManaged.json file provided in this repo to enable this functionality. The command needs to be followed by the contract address of the allowlistManager contract being used.

Once the transaction initiating an auction is submitted and mined, the auction will be available for participation on Gnosis Auction interface at gnosis-auction.eth.link

Hope that clears some questions around the process. Please let me know if there are any additional questions.

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Thanks Chen, that’s very helpful.

The DAO members will need to decide on those parameters before a Gnosis Auction can be initiated. To allow for decisions to be made about each parameter, polls will be created in the thread below. If anyone wishes to add extra voting options to any poll, please reply to that poll with your request.

The optional parameters have also been included as yes/no polls. If anyone is in favour of introducing one of these parameters, please vote “yes” and explain how with a reply comment.

auctioning-token
  • TCR (Tracer governance token)

0 voters

bidding-token
  • USDC
  • USDT
  • Dai
  • ETH

0 voters

sell-amount
  • 47 500 000 TCR tokens (4.75%)
  • 50 000 000 TCR tokens (5.00%)
  • 52 500 000 TCR tokens (5.25%)

0 voters

min-buy-amount (USD used as reference)
  • $3 000 000 USD
  • $3 500 000 USD
  • $4 000 000 USD
  • $4 500 000 USD
  • $5 000 000 USD

0 voters

auction-end-date
  • 2 week period
  • 4 week period
  • 6 week period

0 voters

Network
  • Ethereum Mainnet
  • xDai

0 voters

Additional Parameters

min-funding-threshold
  • Yes
  • No

0 voters

order-cancellation-date
  • Yes
  • No

0 voters

min-buy-amount-per-order
  • Yes
  • No

0 voters

atomic-closure
  • Yes
  • No

0 voters

2 Likes

Auctioning Period
IMO a longer auctioning period provides more transparency and allows more time to drum up our IDO even if it’s in the middle of an auction.

Bidding Token
I think a stablecoin is better suited for an auction over a few weeks, as ETH can be volatile and unnecessary order cancellations can happen due to ETH volatility.

Sell Amount
If we want multiple rounds of IDO, I think a lower allocation for the first round, then higher allocation for subsequent rounds.

Network
I’d prefer doing the IDO on mainnet since it’ll attract more capital, and it has the potential of filtering out less serious buyers since gas is more expensive (maybe this is one good thing about high gas lol). Though I also recognize that an auction held on xDai might attract a more technical audience, though I’m not sure if that’s true anymore now that more people are comfortable with bridges.

Order cancellation date
I prefer leaving this at the default value. This allows out-bid buyers to cancel and reconfigure their bids. I prefer a config that allows for out-bid buyers to cancel and reconfigure their bids.

min-buy-amount
Depends on how confident we are. IMO, we either go big or go home (either a high min-buy or none at all). Both a high min-buy and a 0 min-buy shows we’re confident in TCR. One says we’re confident in a high market cap, the other says we’re confident the community will establish a fair market cap by themselves.

2 Likes

Wanted to give my perspective

Agree! from a price-discovery standpoint, usually that happens towards the end of the auction anyway as big bidders are watching from the side lines and waiting to get some price signal. So picking time period that’s too long can taper the momentum…
I think that the poll should have also shorter options like 3 days and 1 week.

100%

The question is whether you are defining a “serious” buyer just by his buying power?
We have seen many bidders that ended up not participating get upset by “wasting” gas fees.
Agree that mainnet is still the main capital hub

The default is to not allow cancelations at all.
I think that not allowing cancelations toward the end of the auction is def important to prevent manipulation. but aside from that cancelations would be useful.

I think of it as a “protection” of users that bid such small amount that is not even worth the gas cost even… So a minimum of 200-1000$ seems to achieve this IMO

1 Like

looks like I misunderstood the cancellation date, for some reason I thought it was the block number after which orders can be cancelled.

Agree if this happening on mainnet. Though I was thinking about the overall min-buy as opposed to per order.

Yeah, this is a question I think we need to tackle as a group. My viewpoint is if someone doesn’t even want to invest the gas cost for an IDO, they’re probably not going to bridge, stake, and vote/participate with TCR later on.

2 Likes

@Mark11 @m4ri0ml @GUNNER what are your reasons for for voting yes on the additional parameters and what values would you suggest for the ones that have to have a value set (min-funding-threshold, min-buy-amount-per-order, order-cancellation-date).

With respect to the additional parameters - specifically speaking my vote “yes” for minimum buy.
I believe a certain level of seriousness is involved with DAO Governance and those who wish to hold the token soonest should make a real commitment to the project/protocol to a degree (minimum buy-in).

I am all for anyone who wishes to buy should buy, but the last thing the DAO should be concerned with on launch or near launch, is a holder of 0.01 Tracer causing FUD or getting a soapbox to stand on without full understanding of the overall direction.

After certain milestones are met and basic guidelines adhered to, then absolutely, all holders’ voices should be heard - but until then, the DAO needs to get off the ground with as little friction as possible.

1 Like

To add to this, very small buyers do not contribute a lot to the price discovery which is the main goal of the auction. They also incur high gas costs relative to their bid amount.
It is safe to assume that the market price shortly after the auction should be roughly the closing price of the auction, so small buyers can buy from a DEX after the auction is over.
Having said that I don’t think there’s a reason to have the minimum-amount-per-order very high.
IMO something <1000$ would be fine

2 Likes

I can’t see a reason why a small contribution would be harmful in any way. Why exclude?

Maximum valuation is the goal.

I’m assuming your comment is in reply to the min-buy-per-order variable - proposing for it to be 0 (default)?

It was on the minimum buy order amount yes, might have had to make myself more clear there.

We have seen a behavior pattern where relatively inexperienced users submit small bids, ends up not participating and getting angry that they spent so much on gas.
So yeah it’s a bit patronizing to just decide for them that the can’t participate with small amounts if that’s what they want to do.
On the flipside it could prevent some of this frustration.

That makes sense, thanks for explaining.
What is small though? Where to set the minimum.
How much do transactions cost? Let’s say at 30-40 gwei.

You can make your own copy of this gas estimator and play with the parameters

2 Likes

Hey all,

Great discussion going-on here and in the previous thread about treasury management. I represent Maven 11 Capital, an Amsterdam based venture fund. We are definitely interested in becoming active members of the Tracer DAO through acquiring TCR tokens. To do so we would propose to the Tracer DAO a strategic treasury diversification of roughly 5% of the total token supply to take place prior to the Gnosis Auction. This would serve as a way to get USDC into the treasury to make the DAO well-funded regardless of future market conditions. Furthermore, it would be helpful to onboard a group of strategic partners and angel investors into Tracer before launch. Curious to hear feedback from (potential) DAO members about this.

4 Likes

This is pretty exciting, and I don’t want this to be buried. Could you to submit a separate EOI thread so people don’t miss this? Here’s a template to get you started.

3 Likes

Auction reserve price

Peyman Khezr and I have been thinking about how the best way to set up the Gnosis auction - particularly what an appropriate reserve price should be. Peyman is an auction theorist, and has a very impressive publication record in auction theory as you can see here.

I’ve uploaded a paper where we work out the optimal reserve price: ‘Setting the reserve price for the Tracer DAO Gnosis auction’.

Long story short: our view is that the reserve price for the token should be set at approximately USD $0.01 per token. We’ve made a few assumptions here (economists do that) but the core one is that TracerDAO has a total valuation of between USD $35-50m. We came to that by looking at a few other projects in the space and trying to be conservative. Would be interested in the thoughts of others.

7 Likes

This is great Chris - the rigour applied here is tremendous and will certainly help inform the proceeding auction

1 Like