How to Bid on Sealed-Bid Token Auctions

1. Everyone submits a secret bid: (how many tokens, at what price)
2. Bids are encrypted — nobody sees yours, you don't see theirs
3. After the auction closes, all bids are sorted highest to lowest
4. The clearing price is the lowest winning bid
5. Everyone who wins pays the same clearing price (not their bid amount)

Unlike eBay where you pay what you bid, here you pay the market price. This means:

• If you bid $1.00 but the clearing price is $0.75, you pay $0.75
• Overbidding doesn't cost you (much) — you still pay clearing price
• But bid too high and you might win when you shouldn't

• US Treasury has used uniform-price auctions since 1998 (US Treasury, 1995)
• Google's 2004 IPO used this format and raised $1.67 billion (Cornell, 2016)

• ✓ Your bid amount is secret (encrypted end-to-end)
• ✓ Everyone else's bid amounts are secret
• ✓ Only the final clearing price gets revealed

• ✗ That you participated (your wallet submitted a transaction)
• ✗ When you submitted (blockchain timestamp)
• ✗ Your wallet balance and history
• ✗ Your final allocation (how many tokens you won)

(Arcium Docs)

• Multi-Party Computation (MPC): 4+ computers work together to compute the clearing price without any single computer seeing the bids
• Cerberus Protocol: Needs only 1 honest computer out of 4+ to stay secure
• Mainnet Alpha: Live since February 2026

What is this token actually worth to you?

How many years of revenue you think the token is worth. Like a stock P/E ratio:

• 10× = pessimistic (token = 10 years of current revenue)
• 25× = moderate (typical for growing tech companies)
• 50× = optimistic (high growth expectation)
• 100×+ = extreme (rare, only for category leaders)

• Don't use "what others think it's worth"
• Don't use "what I hope it's worth"
• Use "what I'd pay if I had perfect information"

Reduce by 20-30% to account for:

• You might be wrong about the revenue
• Project might fail or underperform
• Token might be overvalued even if project succeeds

Conservative Value = $1.00 × 0.75 = $0.75/token

Because if you win, you're probably the most optimistic person. Most optimistic = probably wrong. Bidding 95-105% of your value protects you from overpaying.

Base estimates:
- Low hype: N = 100
- Medium hype: N = 500
- High hype: N = 2000
- Extreme hype: N = 5000

Then apply adjustment factors from Step 2b

Example:

ReFiHub auction:
- Twitter: 75K followers → High hype → Base N = 2000
- Allocation: $5M → No adjustment (middle range)
- Min bid: $100 → No adjustment (accessible to retail)
- Niche: Climate/ReFi → N × 0.6 → 1200 bidders

Estimated N = 1200

# Conservative (want to make sure you win)
bid = your_value × 1.05

# Moderate (standard formula)
bid = your_value × (N-1)/N × 1.05

# Aggressive (willing to risk losing for better price)
bid = your_value × 0.90

• Good: 12-36 hours before close
• Avoid: Last hour (network congestion, might fail)
• Avoid: First hour (your timing correlates with market conditions)

Even though bids are encrypted, people can infer from when you bid:

• Bid during market pump → probably bidding high
• Bid during market crash → probably bidding low

Use a fresh wallet that:

• Has never been used before
• Was funded from an exchange 1-7 days earlier
• Has only enough SOL for your bid + gas ($0.01)

1. Connect wallet to RaiseZero / Crafts platform
2. Enter amount (in tokens) and price (per token)
3. Confirm transaction (gas: ~$0.001 on Solana)
4. Wait for confirmation
5. Your bid is now locked and encrypted

1. Auction closes (exact time published beforehand)
2. Arcium MPC computes clearing price (5-30 minutes)
3. Clearing price is revealed
4. Tokens are distributed to winners
5. Losing bids are refunded

If your_bid ≥ clearing_price:
    → You won
    → You pay: clearing_price × your_quantity
    → You receive: your_quantity tokens

If your_bid < clearing_price:
    → You lost
    → Your bid is refunded

Tokens usually trade on DEXs immediately after auction.

Possible Outcomes:

1. Price pumps ($0.75 → $1.00): You made a good bid, profit 33%
2. Price stays flat ($0.75 → $0.75): Break even
3. Price dumps ($0.75 → $0.50): You overpaid, loss 33%

• Don't allocate >10-20% of your portfolio to one auction
• Have an exit strategy (when to sell if price dumps)
• Remember: Just because you won doesn't mean it was a good investment

• 20+ bids all submitted within same 1-hour window
• Could be one person with multiple wallets (Sybil attack)

How to check:

• Use blockchain explorer (Solscan, Solana Beach)
• Look at all transactions to the auction contract
• Note timestamps: Are they clustered?

• Many wallets all funded from same source
• All funded on same day
• All with similar balances

How to check:

• Pick 5-10 random auction participants
• Look at their funding transactions
• Do they all come from the same address?

• Tons of small bids at impossibly high prices ($10 when fair value is $1)
• Goal: Make demand look higher than it is
• These bids will lose (they don't pay anything)

How to detect:

• Can't see bid amounts (encrypted)
• But can see: Number of participants
• If 500 wallets but only 50 seem real (rest have $1 balances) → suspicious

1. Sybil Resistance: Require staking SOL or KYC for higher tiers
2. MEV Protection: Use private transactions so validators can't front-run
3. Transparency: Publish bid distribution after auction (anonymized)
4. Monitoring: Ban wallets that show manipulation patterns

• Does project have anti-manipulation measures?
• Is there a reputation system?
• Have they done previous auctions without issues?

• ☐ Research project (revenue, traction, team)
• ☐ Calculate your true valuation (be conservative)
• ☐ Estimate number of bidders (use social signals + economics)
• ☐ Calculate optimal bid using formula
• ☐ Prepare fresh wallet (optional, for privacy)
• ☐ Fund wallet with bid amount + gas

• ☐ Submit bid 12-36 hours before close
• ☐ Confirm transaction went through
• ☐ Don't change your bid (usually not allowed)
• ☐ Watch for manipulation patterns

• ☐ Check if you won
• ☐ Verify you received tokens
• ☐ Monitor price on DEX
• ☐ Decide when to sell (if price dumps)

(Stanford, Levin 2004)

In a first-price sealed-bid auction (you pay what you bid):

• If everyone bids their true value, winner pays too much
• Nash equilibrium: Everyone bids (N-1)/N of their value
• With 10 bidders: bid 90% of value
• With 100 bidders: bid 99% of value

It's a situation where nobody can improve by changing their strategy. Like:

• If everyone else bids 90%, you should bid 90% too
• If you bid higher (95%), you win more often but overpay
• If you bid lower (85%), you lose too often
• 90% is the "sweet spot" where everyone stays

You want to bid just enough to beat the second-highest bidder, but not more.

In a uniform-price auction:

• You pay the clearing price, not your bid
• So you can afford to bid slightly higher
• Adjustment factor: ×1.05 (5% higher than first-price)

(Harvard PON)

If you win by bidding your true value, you probably overestimated:

• Everyone else estimated lower
• On average, the winner is the most optimistic
• Optimistic estimates are often wrong

Rational Response: Bid below your estimate to avoid overpaying

Uniform-Price Helps: You don't pay your (overestimated) bid, you pay market clearing price

• Bidding truthfully = you overpay ~10%
• Bidding with shading = you pay fair market price
• Bidding too low = you lose even when you should win

Example:

• Token true value: $1.00 (average across all bidders)
• Your estimate: $1.10 (you're optimistic)
• If you bid $1.10: You probably win but overpay
• If you bid $1.04: You have fair chance and pay market price
• If you bid $0.95: You probably lose even though token is worth $1.00