CTAG Auction

Fair and limited distribution of tag namespaces

What

The ETS Auction is a continuous English-style auction mechanism for distributing CTAGs. A fixed number of CTAGs is always up for auction, and when each auction ends, a new one automatically begins. Each auction runs for a fixed duration but may be extended in the final moments by new bids.

Why

The auction system enables ETS to:

Distribute CTAGs fairly to the community
Control the rate of CTAG distribution through max number of concurrent auctions
Establish market for CTAGs
Generate revenue for protocol participants
Prevent namespace squatting
Create an engaging community dynamic

How

Auctions are managed through the ETSAuctionHouse.sol contract. The design of the auction is inspired by the Nouns DAO auction.

Default Auction Settings

Parameter	Variable	Value	Description
Max Concurrent Auctions	`maxAuctions`	3	Number of simultaneous auctions
Duration	`duration`	24 hours	Length of each auction
Time Buffer	`timeBuffer`	15 minutes	Extension period for late bids
Min Bid Increment	`minBidIncrementPercentage`	5%	Minimum increase over previous bid
Reserve Price	`reservePrice`	0.1 ETH	Minimum first bid amount

Auction Structure

struct Auction {
    uint256 auctionId;        // Incremented auction number
    uint256 tokenId;          // CTAG being auctioned
    uint256 amount;           // Current highest bid
    uint256 startTime;        // Auction start time
    uint256 endTime;          // Scheduled end time
    uint256 reservePrice;     // Minimum first bid
    address payable bidder;   // Current highest bidder
    address payable auctioneer; // Defaults to ETS
    bool settled;             // Whether auction is settled
}

Bidding

Auction begins with first bid
First bid must meet reserve price
Subsequent bids must increase by minimum percentage
Late bids extend auction by time buffer
Bids must be in native currency (ETH)

Note The auction extension mechanism ("time buffer") prevents last-second sniping by adding time when late bids are placed.

Settling an Auction

Auction must be ended to settle
Any address can settle auction
Winning bidder receives CTAG
Proceeds distributed to:
- Platform treasury
- Tag creator
- Originating relayer

Auction Oracle

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The ETS Auction Oracle is an off-chain process that monitors the ETS Auction House and selects the next CTAG to be released for auction. The Oracle is responsible for:

Detecting RequestCreateAuction event, which is emitted when an auction is settled
Selecting CTAG with the highest use count (eg. used in most Tagging Records)
If CTAGS have the same use count, the oldest CTAG is selected
"Releasing" next CTAG for auction via on-chain transaction

Revenue Distribution Model

When an auction is settled, the proceeds are automatically distributed between three key participants:

Participant	Variable	Default %	Description
Tag Creator	`creatorPercentage`	40	Rewarded to the original creator of the CTAG
Relayer	`relayerPercentage`	30	Rewarded to the relayer that supported the creation of the CTAG
Platform Treasury	`platformPercentage`	30	Allocated to ETS protocol treasury

The distribution works as follows:

The total auction amount is split according to the percentage allocations
Each participant's share is tracked in an accrued balance
Participants can withdraw their accrued balance at any time using the drawDown() function
The system maintains a record of lifetime earnings through the paid mapping

This model incentivizes:

Tag creators to submit high-quality tags that get used frequently
Relayers to support tag and tagging record creation
Sustainable protocol revenue for ongoing development

The percentage splits are governed by the community and can be adjusted through the admin functions setProceedPercentages().