About Padit.Finance
Last updated
Last updated
Padit.Finance is a decentralized English auction platform for multiple objects (e.g., ERC20). Compared to existing platforms, Padit.Finance has the following benefits:
Transparent
Efficient
Auto price discovery
Decentralized platform for token sales is a powerful tool to distribute tokens to early project participants. There are a couple of existing platforms in the market:
First-come first-sell pool, a.k.a. ICO. The basic idea is to put a fixed amount of base token (token to be sold) in the pool, set a fixed price between base token and quote token (token used to buy), and a start time. After the start time, users can buy the base token at the ratio using quote token. This was a very popular model in 2017 ICO boom. However, this model favors early buyers, which results in gas war (e.g., Bancor ICO). Further, the early big buyers may take most of the base tokens and then dump them later in secondary market.
Crowd pooling. The basic idea is to put a fixed amount of base token in the pool, set the number of quote token expected to receive (thus the price), and a time window for selling. During the time window, it could accept the quote token as much as possible. If the number of quote token exceeds the pool's expected value, then the participants only receive the quote token proportional to their deposited quote token. Crowd pooling addresses gas war issue of ICO, but if the token has a large demand, it favors the big buyers since they will receive more base tokens.
Initial Bonding Curve Offering (IBCO). IBCO is similar to crowd pooling except that the price is not fixed - it is determined by the ratio between base token to sold vs. quote token received when the pool is closed. As a result, the participant has no idea about the final price when joining IBCO, and the final price may be significantly higher than expected.
Dutch auction or descending auction. Given a time window and the amount of the token to sell, Dutch auction will decrease the price over the time window. The buyer can choose any time to buy, but the tokens may be sold out if late. One concern of Dutch auction is that early bidders may hardly take profit since they may buy the tokens at much higher price than others.
English auction or ascending auction. Given a time window and the amount of the token to sell, the buys place their bids with (price, amount). When the auction is closed, the bids are settled by the order of price - the bids with higher price will be settled first, and if all the tokens are sold, the rest of bids will not receive the token and the fund (quote tokens) are returned. Since the whole procedure is transparent, everyone could know how much tokens are bought by their bids and decide to place new bids or raise existing bids (raise a paddle in auction field) if they would like to buy more with higher prices. In this procedure, the price of the base token (token to sell) can be better discovered.
The following figure illustrates an example of English auction. However, one issue implementing such auction in blockchain is that sorting the bids with arbitrary price can be extremely expensive. Padit.Finance is a novel English auction for multiple objects with efficient blockchain implementation.
ICO | Crowd Pooling | IBCO | Dutch | Padit | |
Is Price Fixed? | Yes | Yes | No | No | Yes per Tranche |
Is Price Known Upon Depositing? | Yes | Yes | No | Yes | Yes |
Other Concerns | Gas war | Favor Whale | Final price may be much greater than the price when depositing | Early bidders may not take profit |
Padit.Finance is a suite of open-source smart contracts created to ease the process of launching a new project using English auction for multiple objects - one of the most popular auction used in the world!