a decentralised price discovery and liquidity bootstrapping mechanism is a decentralised price discovery mechanism, purpose built for bootstrapping markets for digital assets.

It utilises a new kind of auction, an “exponential token auction,” or in the case of a single item a “binary search auction.”

The system replaces the auctioneer with a smart contract, effectively decentralising the auction process.

Its launch use case is the token distribution and generation of liquidity for the $FVT token.

The aims of the system is to effectively “search” through the population of players in the game, seeking to find a sensible listing price by presenting better than zero slippage buy opportunities at a sequence of price ranges.


Auctions are price discovery mechanisms, because they aim to find the best price for an item within a given group of people.

They have been around for as long as there has been commerce and they are one of the oldest financial institutions. They predate banks, stock markets and potentially even money.

The Babylonian Marriage Market by Edwin Long (1875)

There are many flavours of auctions, with the most typical being the English auction which is used to sell art, livestock, goods etc. Here, an auctioneer ramps the price upwards until there are no more bids, then closes the gap between the last successful bid and the failed ask price. Then, going, going, gone.

Then there’s Dutch auctions, where the price starts high, and lowers until a buyer is found.

There’s auctions for single items, batches of items and even for sections of the radio frequency spectrum, an auction design that won Milgrom and Wilson the Nobel prize in economics this year.

All of these systems aim to search through price space finding the optimal price for the item, or items in question.

The progression of auction theory and the ability to take part in auctions on the internet is revolutionising the process of price discovery. And it is only just beginning.

Now with creation of digital assets and the emergence of tokenised real world assets becoming a reality, rapid price discovery mechanisms become highly desirable. introduces a new kind of decentralised auction system, that is designed to rapidly iterate through price space, allowing permissionless bidding on digital assets.

The Mechanism

The exponential token auction is a mechanism for distributing $FVT tokens (in the first instance), in exchange for Ether, which will be used for bootstrapping liquidity in a decentralised exchange. We have chosen Uniswap as our first venue.

20m tokens are available in the distribution event. Tokens will be sold in lots of increasing price and supply, until all the tokens are sold and a listing price is discovered.

The price and supply doubles in every lot, until the final lot, which is partially full due to hitting 20m tokens.

The $FVT token lot structure

This rapid upward bias is countered with a rapid downward bias. Every block that goes by from the lot opening lowers the price. Price moves up quickly, and down quickly.

The price decays in every block until the lot is gone

The result is a search through price space, providing buy opportunities for all the buyers in the room. Users select how much ETH they would like to spend on purchasing tokens, once they hit “Buy” a transaction is sent to the contract and if the desired amount of tokens are available at the chosen price, they are immediately sent to the user. If the user misses the lot, the transaction fails or if a partial buy occurs, available tokens in that lot are purchased and the remaining ETH is refunded.

An example auction scenario could play out like this:

  • Lot 1 (500k $FVT @ $0.01), sells out in a single buy and price doubles from $0.01 to $0.02 in lot 2.
  • Two buyers bid 10 ETH in close succession for Lot 2 (1m $FVT @ $0.02). One user’s 10 ETH bid is mined first and they receive 10 ETH in $FVT. The second user’s bid is mined subsequently and they receive 3 ETH in $FVT and 7 ETH is returned to their wallet. The lot is sold out and price doubles to $0.04.
The second bidder get’s a partial fill, with the unfilled ETH returned to their wallet
  • Lot 3 (2m $FVT @ $0.04) sells out in a series of successive bids of varying size in ETH
  • Lot 4 (4m @ $0.08) receives some bids at opening price, but not enough to clear the lot. The price then decays block by block. Bids occur at $0.07 and $0.06, where the lot closes and the price doubles from $0.06 to $0.12.
  • This cycle iterates until the tokens in lot 6 are sold completely.
  • The collected ETH is paired with an equivalent $FVT balance at a listing price determined by the average price of sale throughout auction.
  • The uniswap LP tokens are locked in a vesting contract for a minimum of 1 year.
The front end

What will be the listing price?

The entire purpose of this exercise is to put a large question mark on the listing price.

As we have mentioned before, a key principle of governance is outcome indeterminacy. If outcomes are known prior to a decision event, then it wasn’t a decision in the first place.

There are a range of factors that will influence the price discovery process on an auction, but mostly it comes down to who’s in the room.

The majority of what the auction house Christie’s take their commission for, is not because of their auctioning skills, it’s for the people that they can get in the room by calling up the people in their networks.

If you’ve got a priceless guitar to sell, then they will find you the guitar aficionados, if it’s rare art, they will find you the collectors with a history of purchase and taste that aligns with the lots.

In permissionless systems, we don’t make any calls, we don’t know who’s in the room, we just see the price action. That will be affected by:

Wealth distribution

Wealth distribution tends to follow a Lorenz curve like distribution, with Gini coefficients representing the degree of “equality” in the system.

Gini coefficients in crypto are extremely high.

If you’re holding a crypto auction, you want some whales in the room.

In other words there’s “crypto whales” and there’s everyone else. A whale will have more buying power and may relish the opportunity to take a slippage free stake at a higher lot, especially if their bet is a long term one.

However, given their scarcity they may not be in the room at all, in which case the higher order lot prices will never be hit.

Perceived value

The adoption of technology is determined by the perceived value of the technology and its perceived usability, in other words, “can I use it? And will it make my life better?” If a potential user both sees themselves using the technology and sees the potential for it to be of value in their lives, they are likely to use it.

Players in our auction room will have appraised the project by reading our whitepaper, discussing the project with the team and even using the product in our pre-release vote markets.

Depending on their perceived value of the network, they may choose to participate in the auction. A combination of buying power and belief in the future adoption of the token will determine the buying behaviour of an individual in the room.

Number of Players

The performance of an item in an auction is determined by the information that players hold and whether they declare it by bidding at the price that they perceive the item to be worth.

A whale may have high perceived value in the item and the buying power to take higher order lots, but if bids never reach their perceived price, they may never need to declare that information, if there is no buying competition.

The more players in the room, the more competition and the more likely that information is declared.

As the numbers of players increase, the bid price and the true price converge.

The aggregation of bids in the room, forms a price by consensus. is a consensus system. What should the price be?

How do I play?

The auction is held exclusively for users of the network. Join the community, specifically the Telegram announcement channel to receive the link. The application is decentralised, serverless and hosted on

You will need Metamask and some Ether to interact with our dApp.

If you are from a territory that prohibits the purchase, trading, or holding of crypto assets, then you will be blocked from accessing the application.

Can I try it out beforehand?

We will be running an incentivised test auction in our Telegram channel. It will be hosted on the Ropsten testnet.

The top 5 holders of Ropsten $FVT following the test auction will win a proportional share of $1000 USDT.

What is the future of will form an important part of the ecosystem in the future.

Holders of $FVT identity tokens will gain priority access to future auctions.

The underlying mechanism is used to distribute digital identity tokens continually through the platform.

We believe that this mechanism may help solve the price discovery issues currently prevalent in the NFT space. We are planning a range of digital art experiments in the near future.

We will explore the potential of future token listings that are preceded by community votes using the vote market system.




The consensus layer for #DeFi. Building the dApp suite for the decentralised future.

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