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What is a Dutch Auction?

November 22, 2021

A new trend seen in NFT launches has been the Dutch auction, which is considered a fairer way to achieve price discovery on initial launch. What is it?

The price of the auction is determined by the market such that the price continues to lower until a bid is received, while remaining above the reserve price that may have been set. In NFTs, we see the Dutch auction operate in a way where the price of an NFT drops on initial mint until demand is met.

Most common method of NFT launches is FCFS (first-come, first-serve), where the project owner sets a price and the users mint and pay a fixed amount.

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