Dutch Auction
An auction that starts at a high price and lowers it over time until a buyer accepts, commonly used for fairer token or NFT price discovery.
A Dutch auction starts at a deliberately high asking price and lowers it continuously or in steps over time, until a buyer accepts the current price — the opposite structure from a traditional English auction (see Kaavon's "English Auction" glossary definition), where bidding starts low and rises.
In crypto, Dutch auctions are commonly used for token sales or NFT mints specifically because they let the market itself discover a fair clearing price, rather than the seller guessing a fixed price in advance that could be set too high or, more commonly in a fixed-price sale, too low relative to actual demand.
Examples
- A Dutch auction token sale starts at a high price and lowers over time until participants begin buying, letting demand itself determine the clearing price.
- Dutch auctions are commonly used specifically to avoid the underpricing risk a fixed-price sale carries when demand turns out to be much higher than expected.