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When the seller wants to sell a fixed supply and the demand is large （ Or uncertain and may be high ） When you buy your goods , One of the choices they often make is to set the price significantly lower than “ The market will bear ” Price . As a result, the item quickly sold out , Lucky buyers are those who try to buy first . This is in The etheric fang In many cases in ecosystems , especially NFT Sales and token sales ICO. But this phenomenon is much older than that ; Concerts and restaurants often make similar choices , The price is low , Causing seats to sell out quickly or buyers to queue up .
Economists have been asking a question for a long time ： Why do sellers do this ？ Basic economic theory shows that , It is best for the seller to sell at the market clearing price , That is, the quantity the buyer is willing to buy is exactly equal to the price of the quantity the seller must sell . If the seller doesn't know what the clearing price is , The Seller shall sell... By auction , And let the market determine the price . Selling at a price lower than the market clearing price not only sacrifices the seller's income ; It also hurts buyers ： The item may sell out soon , So many buyers have no chance to get it at all , No matter how much they want it and are willing to pay for it . Sometimes , The competition caused by these non price based distribution mechanisms will even produce negative externalities that damage the third party —— As we will see , This impact is particularly serious in Ethereum ecosystem .
But nonetheless , The fact that pricing below market clearing is so common shows that , There must be some compelling reasons for the seller to do so . in fact , As research on the subject over the past few decades has shown , Often . therefore , It's worth asking a question ： There is no way to be more fair 、 Less inefficiency and less damage to achieve the same goal ？
Selling at a price lower than the market clearing price will bring great inefficiency and negative externalities If the seller sells the item at the market price or by auction , So the person who really wants the item has a simple way to get it ： They can pay a high price , Or if it's an auction , They can pay a high price . If the seller sells the goods at a price lower than the market price , Supply exceeds demand , So some people will get the product , Others will not . But the mechanism for deciding who will get the project is clearly not random , And there is usually no good correlation with the degree to which participants want the project . Sometimes , It involves clicking buttons faster than others . At other times , It involves early morning in your time zone 2 Wake up （ But in other people's time zone, it's night 11 O'clock or even afternoon 2 spot ）. There are other times , It just becomes a kind of “ An auction by other means ”, A more chaotic 、 Auctions that are inefficient and full of more negative external factors .
In the Ethereum ecosystem , There are many obvious examples . First , We can see 2017 Year of ICO boom .2017 year , A large number of projects have launched the first token issue (ICO), The typical pattern is Cap sales ： The project will set a hard ceiling on the price of tokens and the number of tokens they are willing to sell , And sales will start automatically at a certain point in time . Once the number of tokens reaches the upper limit , Sales will end .
What is the result? ？ actually , These sales usually take place in a short period of time 30 In seconds . once （ Or rather , Just before the sales started ）, Everyone will start sending transactions to try to enter , Provide higher and higher fees to encourage miners to include their transactions first . An auction under another name —— Except that income goes to miners instead of token sellers , And the extremely harmful negative externalities of pricing all other applications in the chain as sales proceed .
BAT The most expensive transaction in sales is set up 580,000 gwei The cost of , Paid 6,600 To participate in the sales at a cost of US $
Since then, many ICO Various strategies have been tried to avoid these natural gas price auctions ; One ICO In particular, there is a smart contract , You can check the of the transaction gasprice, If exceeded 50 gwei（ Transaction fee ）, Then reject it . But of course it doesn't solve the problem . Buyers who want to cheat the system send many transactions , I hope at least one person comes in . Auction again under another name , This time the chain is more blocked .
lately ,ICO Become less popular , but NFT and NFT Sales are very popular now . Unfortunately ,NFT The field failed to absorb 2017 Years of teaching ; They are like ICO A fixed number of fixed supply sales （ for example , Please check this contract here mint The first 97-108 Function of row ）. What is the result? ？
This is not even the biggest ; some NFT Sales led to a surge in natural gas prices to 2000 gwei
Once again, , Users are scrambling to get high natural gas by sending higher and higher transaction costs （ Service Charge ） Price . Another name auction , Like before , stay 15 Price all other applications on the chain in minutes .
So why do sellers sometimes sell at a price lower than the market price ？
Is it a new phenomenon to sell at a price lower than the market , Whether it's blockchain Space , Outside and inside , And many articles, papers and podcasts have been written in the past decades （ And sometimes complain bitterly ） About unwilling to use auction or fixed price market - Clear level .
Many arguments are in blockchain space （NFT and ICO） And beyond the blockchain space （ Popular restaurants and concerts ） The examples are very similar . One particular concern is fairness and the desire not to shut out the poor , The desire not to lose fans or be nervous because they are considered greedy .Kahneman、Knetsch and Thaler 1986 The 2005 paper well illustrates how perceptions of fairness and greed affect these decisions . In my own right 2017 year ICO In the memories of the season , The desire to avoid greed is also a decisive factor in preventing the use of auction like mechanisms （ I have no memory most of the time here and don't have many sources , Although I did find a link to an imitation video that is no longer considered available In auction based Gnosis ICO And the National Socialist German workers' Party ）.
Apart from fairness , There is also a long-standing debate , That is, products sold out and long queues will create a feeling of popularity and prestige , This makes the product more attractive to others . Of course , In the rational actor model , High prices should have the same effect as long queues , But in fact, long queues are more obvious than high prices . This is for ICO and NFT And for restaurants . In addition to these strategies that generate more marketing value , Some people actually find that participating in or watching games that seize limited opportunities first , Then everyone else took them all away , This is very interesting. .
But there are also some factors specific to blockchain space . Sell at a price lower than the market clearing price ICO An argument for tokens （ It's also persuasion OmiseGo The decisive factor for the team to adopt their cap sales strategy ） Related to the community dynamics of token issuance . The basic rules of community emotion management are very simple ： You want the price to rise , Instead of falling . If community members “ In the green rising range ”, They're happy . however , If the price is lower than the price at the time of purchase by community members , Put them at a net loss , They will become unhappy and start calling you a liar , And may form a chain reaction on social media , Cause others to call you a liar .
The only way to avoid this effect is to set the selling price low enough , In this way, the market price after listing will almost certainly be higher . however , How can you really do this without causing the rush buying dynamics of the auction in other ways ？
Some more interesting solutions
This year is 2021 year . We have a blockchain . Blockchain not only contains a strong decentralized financial ecosystem , It also includes a rapidly growing suite of various non-financial instruments . Blockchain also provides us with a unique opportunity to reset social norms . For decades, economists have shouted “ efficiency ” In case of failure , Uber legalized surge pricing ; Of course , Blockchain can also be an opportunity to legitimize new uses of mechanism design . Of course , Instead of fiddling with coarse-grained one-dimensional strategy space sold at market price and below market price （ Perhaps there is the second dimension of auction and fixed price sale ）, We can use more advanced tools to create a more direct solution to the problem 、 Methods with fewer side effects ？
First , Let's list our goals . We will try to cover both (i) ICO、(ii) NFT and (iii) Conference tickets （ It's actually a kind of NFT） The situation of ; Most of the required properties are shared in three cases .
1. fair ： Don't completely exclude low-income people from participation , At least give them some opportunities to participate in . For token sales , There is a different but related goal , That is to avoid a high concentration of initial wealth and have a larger and more diversified initial token holder community .
2. Don't make a game ： Avoid creating a situation where many people are eager to take the same action and only the first few enter （ This situation will lead to the terrible pseudonym auction we see above ）.
3. No fine-grained knowledge of market conditions is required ： Even if the seller has no idea how much demand there is , The mechanism should also work .
4. fun ： Ideally , The process of participating in sales should be fun and have game like quality , But it's not frustrating .
5. Give buyers a positive expected return ： In token （ perhaps , In this respect ,NFT） Under the circumstances , Buyers should be more likely to see prices rise than fall . This necessarily means selling to buyers at a price lower than the market price .
We can see from （1） Start . From Ethereum's point of view , This is a very clear solution . Instead of creating competitive conditions , Just use a clearly designed tool to do this ： Personality proof agreement ！ This is a quick mechanism ：
Mechanism 1 Each participant （ Verified by identification ） At most X With Price purchasing unit P, If they want to buy more , They can buy at auction .
It seems that it has met many goals ： Provides fairness on a personal basis , If the auction price is higher than P The buyer can get a positive expected return by selling the part according to the person mechanism , The auction part does not require the seller to know the level of demand . Whether it avoids racial ？ If the number of participants purchased through the pool per person is not that high , It seems that it is . however , If so many people show up , Everyone's pool is not big enough , Can't provide distribution for everyone ？
That's an idea ： Make everyone's distribution amount itself dynamic .
Mechanism 2 Each participant （ Verified by personal certification ） Deposits can be deposited into smart contracts , To declare at most X Interest on tokens . Last , Every buyer will get the distribution min(X, N / number_of_buyers) Tokens, , among N Is the total amount sold through each person's pool （ Other amounts can also be sold by auction ）. The buyer's deposit in excess of the amount required for purchase distribution will be refunded to them .
Now? , No matter how many buyers pass through the pool per person , There are no competitive conditions . No matter how high the demand is , There is no better way than to participate early .
This is another idea , If you like your game mechanism, be smarter and use fancy quadratic formulas .
Mechanism 3 Each participant （ Verified by personal certification ） We can use \(P * X^2\) For the price of \(X\) A unit of , Each buyer can buy up to \(C\) Tokens .\(C\) Start with a lower number , Then it increases over time , Until enough units are sold .
This mechanism has a particularly interesting feature , If you're making governance tokens （ Please don't do this ; This is purely a suggestion to reduce damage ）, The number allocated to each buyer is theoretically the best , Although, of course, after-sales transfer will reduce this optimality over time . Mechanism 2 And mechanism 3 It seems that all the above objectives have been met , At least in a way . They are not necessarily perfect and ideal , But they are really a good starting point .
There's another problem . For fixed and limited supply NFT, You may encounter such problems , That is, the equilibrium purchase quantity of each participant is a decimal （ In the mechanism 2 in , May be number_of_buyers > N, In the mechanism 3 in , May set \(C = 1\) Has caused enough demand to exceed - Subscription sales ）. under these circumstances , You can sell odds and ends by offering lottery tickets ： If there is N Items to be sold , So if you subscribe to , You have a chance N / number_of_buyers Actually get the item , Otherwise you will get a refund . For meetings , Groups that want to participate together can be allowed to bundle their lottery tickets , To guarantee all win or all lose . The ability to acquire specific items can be sold at auction .
An interesting and mild gray hat strategy for conference tickets is to disguise the pool sold at market price as “ sponsorship ” The bottom of the . You may end up seeing a bunch of faces on the sponsor's board , however …… Maybe it's good ？ After all ,EthCC At their sponsor's board of Directors John Lilic Face ！
In all these cases , The core of the solution is simple ： If you want to be reliable and fair to people , Then your mechanism should have some clear measure of human input . The proof of personality protocol can do this （ if necessary , Zero knowledge proof can be combined to ensure privacy ）. therefore , We should combine the efficiency of market pricing and auction pricing , And the equal benefits proved by the personality mechanism , Combine .
Answers to possible questions
ask ： Will many people who don't care about your project buy the item through an egalitarian plan and resell it immediately ？
answer ： first , May not be . In practice , This kind of meta game takes time to appear . however , If / When they do that , One possible mitigation is to make them unable to trade for a period of time . This is actually effective , Because personal identification is not tradable ： You can always use your face to claim that your previous account has been hacked , And your corresponding identity , Including everything in it , Should be transferred to a new account .
ask ： If I want my project to be accessible not only to ordinary people but also to specific communities , What should I do ？
answer ： Don't use personality certificates , Instead, use participation proof tokens related to events in the community . Another alternative , It also has egalitarian and game value , Is to lock some items in the solution of some publicly released puzzles .
ask ： How do we know people will accept this ？ In the past , People have been resisting strange new mechanisms .
answer ： It's hard for people to accept a new mechanism that they think is strange , Let economists write down what they are doing for “ efficiency ”（ even to the extent that “ fair ”）“ should ” How to accept its conclusion . However , Rapid changes in the environment do a good job in resetting people's expectations . So if there's a good time to try this , Blockchain space was then . You can also wait “ Meta universe ” , But most likely Meta universe The best version of will run on Ethereum anyway , So you might as well start now .
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