Decentralized finance heavyweight Uniswap has announced Continuous Clearing Auctions (CCA), a new protocol aiming to facilitate token offerings through its infrastructure.
According to a Thursday announcement, Uniswap’s CCA “helps teams bootstrap liquidity on Uniswap v4 and find the market price for new and low-liquidity tokens.” The company also stated this is just “the first of several tools” it is building to help projects launch and deepen token liquidity on the platform.
The announcement coincided with preparations for the first CCA-enabled sale. Privacy-focused Aztec Network opened its community-only AZTEC token sale on Thursday, with a public phase scheduled for December 2.
The Aztec team claims that it has “taken the community access that made the 2017 ICO era great and made it even better.” The team reportedly worked alongside Uniswap to develop the new protocol and “prioritize fair access, permissionless, on-chain access to community members and the general public pre-launch.” The team said the AZTEC token will be 100% community-owned once tokens unlock.
A New Token Sale System
Uniswap stated in the press release that “liquidity formation often happens behind closed doors,” leading to “information gaps, privileges a few players,” and sometimes “thin and unstable” markets. With CCA, the two partners hope to implement an on-chain native market creation with transparent pricing, bidding and settlement, as well as gradual price discovery and automatic liquidity seeding to Uniswap’s decentralized exchange (DEX).
“No gatekeepers or offchain deals,” Uniswap said.
CCA sales begin with projects defining the number of tokens on sale, the starting price, and the duration of the auction. They can also support running in tranches, verification tools such as ZK Passport (a privacy-enhanced, zero-knowledge proof-based Know Your Customer implementation), or entirely custom modules.
Users can then place their bids, specifying a maximum price and a total spend. Bids cannot be withdrawn while in range, but there is no limit on the number of bids. Each bid is automatically spread across the remaining blocks of the auction and only fills if the block’s clearing price is at or below the limit price.
CCA’s Price Discovery Mechanism
At the end of each block, the protocol sets the highest price at which tokens were sold in that block. Higher bids fill first, then bids at the maximum price and everyone who fills in the block pays the same price.
Uniswap explained that as more bids divide the fixed per-block supply, clearing prices can either stay the same or increase. Early bidders are expected to get the better deal “since a larger portion of their bid can fill in earlier, cheaper blocks.”
The decentralized finance (DeFi) company announced that the CCA smart contract is now live and available to anyone. In the coming months, Uniswap also expects to release additional modules for the new token sale system.
This report comes just days after Uniswap’s token rallied by over 38% following the Uniswap Foundation and Uniswap Labs’ proposal to activate a protocol-level fee mechanism to burn Uniswap (UNI) tokens. The team also announced a plan to burn 100 million UNI — roughly 16% of UNI’s circulating supply — from the treasury.