Overview

The H20 passive auction mechanism is designed to adjust the H20 investment portfolio every quarter or year. This mechanism adopts a price-prioritized auction mode, where bidders are determined in the order of their bids from highest to lowest, and the transaction is concluded at the lowest winning price. The auction has a time limit and requires setting a start time and duration. Each auction will reward a certain number of H20 tokens. Unlike traditional active adjustment modes, this passive auction mechanism leaves the value judgment entirely to the market, reducing the risk of adjustment losses caused by insufficient liquidity in the prophecy machine and exchange.

The auction status is divided into three types: ongoing, failed, and successful.

Before the auction starts, the issuance and redemption of H20 will be locked, and users will not be able to subscribe or redeem H20, but they can buy and sell H20 on decentralized exchanges (DEXs) or centralized exchanges (CEXs).

The auction process includes: auction start -> user participation -> announcement of winning bids -> user asset distribution.

Note: A negative bid indicates receiving an H20 reward, while a positive bid indicates paying H20. A higher positive bid is preferred over a lower negative bid, e.g., 0 is higher than -1, -0.2 is higher than -0.3, and 1 is higher than 0.5.

Auction Start

The auction can only be initiated by H20 officials during quarterly adjustments. Before the auction starts, H20's issuance and redemption operations will be locked, and the lock will be released after the auction ends. To initiate an auction, the following settings are required:

1. The type of rebalancing token (e.g., BTC, ETH, BNB, ENS, etc.)
2. The amount of rebalancing tokens (positive numbers indicate selling, negative numbers indicate buying, and the amount must be divisible by the auction lot size)
3. The auction start time (timestamp, in seconds)
4. The auction duration (in seconds)
5. The estimated H20 reward for this auction
6. The total auction lot size
7. The minimum bid interval for H20 (recommended to be one-thousandth of the single reward H20 amount)
8. The maximum allowed bid increments (the maximum total bid increment value must not exceed 4096 based on the above minimum bid interval)

Ideally, the total market value of the tokens for sale and purchase should be close, which will be calculated and set by the official in advance. Participating users will receive H20 as a reward to balance the price fluctuations of the rebalancing tokens and pay for the users' participation costs. If the profit from the rebalancing is high, even if users pay H20, they will still have a profit. In this case, the contract will prioritize the users with the highest bids and conclude the transaction at the lowest price. The actual transaction price will not exceed the user's bid. If the user chooses to receive an H20 reward, they will receive more H20; if they choose to pay H20, they will receive a refund of the excess H20.

User Participation

Users need to participate in the auction within the specified time; otherwise, they will not be able to execute the auction successfully.

Each auction will have a total quantity (e.g., 10,000 shares), each corresponding to a certain price (e.g., rewarding 1 H20) and a certain quantity of rebalancing tokens. Users need to prepare the corresponding quantity of rebalancing tokens to participate in the auction.