TechFlow news — The crypto venture capital firm Paradigm has published an article introducing the Gradual Dutch Auction (GDA) mechanism, which works by breaking down a sale into a series of Dutch auctions—a type of auction that starts at a high price and gradually decreases until buyers place bids. GDA allows users to purchase multiple items from such auctions in a single transaction, saving gas fees.
Paradigm believes this is an effective mechanism for selling both fungible and non-fungible tokens that lack liquid markets. For example, suppose Alice wants to sell a collection of 10,000 NFTs. She may be uncertain about the fair market price and might consider selling them all in a single Dutch auction—starting at a high price and gradually lowering it until all NFTs are sold. However, such an auction might not be ideal: buyers may lack sufficient interest in purchasing all items at once.
Instead, Alice could use GDA to auction one NFT at a time. For instance, she could launch a new Dutch auction every minute for each piece in her collection. This approach gives the market more time to discover a fair price for her artwork.
