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Cryptocurrency and Web3 focused investment firm, Paradigm aims to achieve the establishment of recently built crypto-assets and businesses. The San Francisco-based corporation recently propose a mechanism to benefit NFT marketplaces. Reportedly, Paradigm proposed to introduce a mechanism called Gradual Dutch Auction (GDA) to assist the NFT marketplace by enabling efficiency in asset sales that have illiquid markets. https://twitter.com/WuBlockchain/status/1511197050071031808
How Does Gradual Dutch Auction Function?
Similar to the workings of a Dutch Auction, the Gradual Dutch Auction operates by dividing sales into a sequence of auctions. In the case of a Dutch Auction, a bidder began auctioning by stating a high asking price, and gradually decreasing the value until all the products are sold. On the other hand, GDAs allow users to start multiple auctions for each of their products at once to efficiently consume minimized amount of gas. This provides a market with more time to find a fair price for the product.
Paradigm’s Two Solutions For Efficient Markets
The venture capital firm focuses on two types of GDAs, discrete and continuous. Discrete GDAs assist in selling non-fungible tokens (NFTs) and Continuous GDAs are useful for selling fungible tokens. Gradual Dutch Auctions play a significant role by becoming an efficient instrument to sell fungible as well as non-fungible tokens with illiquid markets. The initiative of the Gradual Dutch Auction is an effort put in place by research and talent partners of Paradigm.