Arbiter Auction Models
Harberger Lease Auction
Overview:
The Harberger Lease Auction is a dynamic, rent-based auction mechanism designed to allocate an asset like the Arbiter Role. At any moment, participants can outbid the current renter by offering a higher rent for at least a minimum rent period. The new renter gains control of the asset , ensuring both contestability and stable revenue for the protocol.
Mechanism:
Rent Declaration: The current renter holds the asset by paying a self-declared rent. This rent is charged continuously (e.g., daily).
Minimum Rent Period: A renter must commit to paying the declared rent for a specified minimum rent period (e.g.: 10 blocks, 4 hours). This ensures the protocol receives predictable revenue before the asset can be reclaimed.
Overbidding: At any point, another participant can reclaim the asset by offering a higher rent. To do so, the challenger must:
Commit to paying a rent higher than the current declared rent.
Cover the minimum rent period up front as collateral.
Role Transfer: If the current renter is outbid:
The asset is immediately transferred to the challenger.
The current renter is refunded any unused portion of their prepaid rent.
Revenue Distribution: Collected rent is distributed according to protocol rules:
X% goes to the protocol’s treasury.
Y% is allocated to liquidity providers.
Z% may be burned or used for protocol incentives.
F% is charged as a fee by the Arbiter Protocol.
Example Scenario:
Initial Rent: A participant rents the Arbiter Role by committing to pay 10 tokens/hour for a minimum period of 7 hours. This rent is charged continuously, with a portion distributed according to the protocol’s rules.
Challenger Overbids: On the 3rd hour, another participant offers to pay 12 tokens/hour. They cover the required minimum rent period (7 hours) up front, totaling 84 tokens as collateral.
Role Transfer: The asset is transferred to the challenger. The first renter is refunded the unused portion of their rent (4 hours’ worth). The new renter now controls the Arbiter Role at 12 tokens/hour.
Last updated