AuctionHouse Improvement Proposal: Additional in protocol incentives

[dob]

Right now AuctionHouse provides one protocol based incentive for marketing and bringing bidders to auctions: the distribution cut. What other incentives should exist for other roles in an auction ecosystem? In this case the auction sets an incentive for one party to market it, but how could it set an incentive for multiple parties? Can you securely set an incentive for a party on a per-bid basis? If we can’t solve a verifiable standard for transferring ownership of non fungible assets , do we need a fraud resolution procedure? What other incentives would you like to see?

[rmerom]

First, I love the distribution cut idea, instead of creating yet another app-specific token (which begs for a future fork to remove it and use straightforward Ether).
Re multiparty cut, I wonder if the following can work: the seller sets the distribution cut (say, at 5%). The AuctionHouse contract allows registering of multiple "promoter addresses" and uses their (address % 2^32) as the "referral code". This can be used as bid parameter by different frontends sending bids, and the eventual cut is distributed among the promoters based on some metric that takes into account the bids. This metric probably requires some anti-fraud measures which I'd be happy to continue discussing.

[dob]

@rmerom Yah I think something like that is the right direction. Some attacks I can think of...

1. If you get some portion of the cut for each bid you submit, you could see someone bidding 10 ETH, and a platform submitting bids of 9.9 ETH, 9.99 ETH, 9.999 ETH, etc before submitting the final 10 ETH bid in order to make it look like they submitted more bids to get a bigger cut.
2. If only the winning bid gets a cut, you could see someone writing a client that just submits the bid with a referral address that's the same as the bidder, so the bidder themselves gets the cut, thereby making the item actually cheaper for that person than it would be for others.

Maybe there's some sort of whitelabeling solution, where anyone can submit a bid with their referral address, and the seller (or more likely the frontend client on their behalf) will accept or whitelist the the reputable ones, at which point since they're all reputable they can enter into the split algorithm you suggested. Eventually most platforms with scale will be known so they can be pre-whitelisted by clients as part of the auction creation.

As it stands now the distribution cut incentivizes platforms to get users to create auctions, and to get bidders to bid...which is nice. It would just be great to be able to incentivize multiple platforms instead of just one.

[rmerom]

You're making a valid point. I think if promoters need to pre-register, though (e.g. by pre-listening to events of auctions created, and getting some window of opportunity to register themselves while paying a tiny fee to avoid scam), then this "attack vector" would become much less popular. I see it much as the Amazon Afilliate program. As much as I'm embarrassed to say this, I'm buying quite a lot on Amazon but (at least up until now :) haven't taken the effort to create an Affiliate account to reduce the prices I pay. In other words, I think for most real-world problems, this would be a rather rare occurrence.

It is very true, though, that not every bid can generate a referral fee for the reasons you mentioned. If only the winner's referral gets a fee, we might see the ecosystem converging into only a few promoters per auction, which may not be that bad, because the incentives are more aligned that way (with many promoters it's harder to tell how much effort each one has put).

[Samaritanin]

why you not develop this project further?

[dob]

@Samaritanin It definitely should be developed further. A year ago it was a proof of concept, but there were no non-fungible assets conforming to the standard to actually auction. Now we have ERC 721 assets like Cryptokitties and more coming every day, so the project should be updated to support these. I'll file an issue, and definitely don't hesitate to pick it up and submit a PR :)

[Samaritanin]

I thought that you stopped this project, because you realized that there will be little benefit from it. I want to develop an auction with another marketing concept, from which there will be a real business benefit.
For this - needed developers. Want to join CTO the team?