Taking part in the SAKE Dutch Auction
This article will take you through the process of participating in the SAKE token sale using a MISO Dutch auction. From committing your SUSHI to claiming your tokens at the end.
It’s finally here! Our first MISO auction — tokenized SAKE! While Dutch auctions were first used over 400 years old, we’re bringing something completely fresh with our first auction. Our commitment to blending technology and tradition extends all the way from the SAKE product to the auction mechanism itself! 🤓
So if you’re confused at that 88,000 SUSHI Starting Price, or are trying to figure out when is the best time for you to get in, we’ve prepared this little article to help you understand our Dutch auctions.
Terms you need to know
There are a few important terms and pieces of information to get your head around before the auction begins. Though much of this will be familiar to anyone participating in token auctions or general trading, some terms and values are specific to Dutch auctions.
Amount For Sale — The total tokens available in the auction.
Start Price — The initial price bidding will start at. Unlike a traditional auction where start price is set lower than the expected value, in a Dutch auction the starting price is generally set far higher than the expected price.
Reserve Price — This is the minimum price the auction is descending towards. Set by the auction creator, this gives the token batch a total value it needs to reach for the auction to succeed.
Start/End Date — The time period the auction will take place over. The SAKE auction will take place over 7 days, starting 20/05/2021. The bidding price will descend in a linear fashion from start price to reserve price over this time.
Auction Price — The current price per token. Auction Price will start at the Start Price, then begin descending towards the Reserve Price linearly.
Commitment — When a participant bids at the auction, they are agreeing to the maximum they will spend and the minimum amount of the token they will accept. The participant is ‘committed’ to spend a certain amount and the auction creator is ‘committed’ to give the buyer tokens to that value.
Participating in the auction
Like any auction, you’re going to want to enter the SAKE auction with your own perceived market value of the token(and/or beverage) and a limit on how much you’re willing to spend. We can’t help you out there unfortunately. But we can prepare you for what is going to go down during the auction itself — and give you a few things to keep in mind.
The auction begins at the starting price. As mentioned, this will generally be set higher than anyone would be willing to pay and the auction will begin descending in price.
*Not Financial Advice* “Smaller fish” often make their commitment at the onset of bidding, in order to ensure themselves a portion of supply before the “whales” begin acting closer to market value and snap up supply.
Token supply and Auction Time begin decreasing
For those that got in at a higher price, it’s time to sit back and watch the amount of tokens you’ll receive rise. For those yet to get in, token supply is being reduced concurrent with the price dropping — as any prior commitments are now worth more tokens. The real motivator in participating in a Dutch auction kicks in — what if the tokens sell out? Rather than encouraging you to compete with other participants on individual wallet size, you can focus on the market value of the token itself — if you feel like the tokens true value is approaching the current auction price, it’s time to act!
Making your commitment
There’s still tokens on offer and you’re ready to put your funds in. Great! Over on the side you’ll see the option to Commit SUSHI. You can enter in any amount you’re willing to commit, and see the minimum SAKE tokens you’re locked in to receive. If you’re happy with the amount you’ll receive and the amount you’ll have to outlay, go ahead and commit to your bid!
The Market sets the price
For you, your job is over. As soon as your commitment goes through, your share of the tokens will begin to grow! The goal in a Dutch auction isn’t to sell some of the tokens though. It’s to find out what price all the tokens will go for. For the participants vying to decide the closing price, having the item sell out before they act creates significant buying pressure. Those capable of covering the remaining tokens, buying out supply and closing off the auction have the option to wait and possibly set a slightly lower closing price or act quickly, and ensure they receive the most supply.
As soon as the entire token supply has been committed, the closing price is set and the auction will be closed. At this point, simply return to the SAKE auction page and claim your tokens.