IdeaFeX Deep Dive 04 — Auction & Multilateral Deal Flow

Beyond the marketplace that we covered in Deep Dive 03, in addressing some of the current pain points in financing, we also introduce a unique auction method on IdeaFeX. Upon the fundraisers’ application, we conduct initial screening before allowing the fundraiser to customize the auction and to establish the terms of investment. Upon approval, the auction is announced on IdeaFeX and broadcast to subscribers interested in similar investment opportunities. After a defined delay for investors to study the opportunity, the bidding window opens. Investors can submit and update a series of competitive bids. As the bidding window closes, all winning bids will be awarded tokens at the same price determined from the competitive bidding. For more detailed description on how auction works on IdeaFeX, please refer to the Features Deep Dive section in our Token White Paper. The IdeaFeX Auction Method is instrumental to multilateral financing deal flow.

Fundraisers and investors alike benefit immediately from optimal price discovery by market mechanism. Unlike bilateral deal flow where uncertainties and poor access hinder deal optimization, in an auction inputs from all participating investors together determine the final price of the tokens. The auction mechanism is designed such that all winning bidders are willing to pay at least the final auction price given all public information, and that all losing bidders are prepared to pay at most this price (at the final auction price, the first-come-first-served principle is observed). By design, therefore, our auction method ensures correct valuation. The price discovered through this process is also the one that the secondary market is ready to support...

This is an exert of the article originally published on our Medium channel.