Increasing Discount Collateral Auction House

Auctioneer that tries to recapitalize the system by selling collateral at an increasing discount

1. Summary

Increasing discount collateral auctions are similar to fixed discount ones in that they are used to preserve the overall system health by liquidating under-collateralized SAFEs and selling off collateral at a discount. This auction type automatically calculates an amount of collateral to send back to a bidder, taking into account the amount of system coins the bidder submits as well as the current system coin redemptionPrice (and optionally its market price) and collateral market price.

2. Contract Variables & Functions

Variables

  • contractEnabled - settlement flag (1 or 0).

  • AUCTION_HOUSE_TYPE - flag set to bytes32("COLLATERAL")

  • AUCTION_TYPE - flag set to bytes32("INCREASING_DISCOUNT").

  • authorizedAccounts[usr: address] - addresses allowed to call modifyParameters() and disableContract().

  • safeEngine - storage of the SAFEEngine's address.

  • bids[id: uint] - storage of all bids.

  • collateralType - id of the collateral type for which the CollateralAuctionHouse is responsible.

  • minimumBid - minimum amount of system coins that must be submitted by each bidder.

  • totalAuctionLength - auction length (default: uint48(-1)).

  • auctionsStarted - total auction count, used to track auction ids.

  • lastReadRedemptionPrice - the last read redemption price. Can (and most probably is) be different than the latest OracleRelayer._redemptionPrice

  • minDiscount - initial discount (compared to the collateral market price) used when calculating the amount of collateral to send to a bidder.

  • maxDiscount - maximum discount (compared to the collateral market price) used when calculating the amount of collateral to send to a bidder.

  • perSecondDiscountUpdateRate - the rate at which the discount will be updated in an auction.

  • maxDiscountUpdateRateTimeline - max time over which the discount can be updated in an auction.

  • lowerCollateralMedianDeviation - max collateralMedian collateral price deviation (compared to the FSM price) used when the median price is lower than the collateralFSM price and the contract needs to pick which one to use

  • upperCollateralMedianDeviation - max collateralMedian collateral price deviation (compared to the FSM price) used when the median price is higher than the collateralFSM price and the contract needs to pick which one to use

  • lowerSystemCoinMedianDeviation - max systemCoinOracle price deviation (compared to the redemptionPrice) used when the system coin's redemptionPrice price is higher than its market price and the contract needs to pick which one to use

  • upperSystemCoinMedianDeviation - max systemCoinOracle price deviation (compared to the redemptionPrice) used when the system coin's redemptionPrice price is lower than its market price and the contract needs to pick which one to use

  • minSystemCoinMedianDeviation - minimum deviation between the system coin's market and redemption prices that must be passed in order for the contract to use the deviated price instead of the redemption one

  • oracleRelayer - the address of the OracleRelayer

  • collateralFSM - the collateral type's FSM address

  • collateralMedian - collateral type medianizer address

  • systemCoinOracle - market price oracle for the system coin

  • liquidationEngine - the address of the LiquidationEngine

  • RAD - number with 45 decimals (e.g a safeEngine.coinBalance)

  • WAD - number with 18 decimals (e.g a bid submitted when someone wants to buy collateral from an auction)

  • RAY - number with 27 decimals

Data Structures

  • Bid - state of a specific auction

    • amountToSell - quantity up for auction / remaining collateral for sale

    • amountToRaise - total system coins still requested by the auction

    • currentDiscount - the current discount being used in the auction

    • maxDiscount - the max value that the currentDiscount can have

    • perSecondDiscountUpdateRate - the rate at which the currentDiscount grows

    • latestDiscountUpdateTime - last time when the currentDiscount was updated

    • discountIncreaseDeadline - deadline after which the discount cannot increase anymore

    • forgoneCollateralReceiver - address of the SAFE whose collateral and debt were confiscated

    • auctionIncomeRecipient - recipient of auction income / receives system coin income (this is the AccountingEngine contract)

Modifiers

  • isAuthorized - checks whether an address is part of authorizedAddresses (and thus can call authed functions).

Functions

  • modifyParameters(bytes32 parameter, uint256 data) - update an uint256 parameter.

  • modifyParameters(bytes32 parameter, address data) - update an address parameter.

  • addAuthorization(usr: address) - add an address to authorizedAddresses.

  • removeAuthorization(usr: address) - remove an address from authorizedAddresses.

  • getCollateralMedianPrice() public view returns (priceFeed: uint256) - get the collateral's median price from collateralMedian

  • getSystemCoinFloorDeviatedPrice(redemptionPrice: uint256) public view returns (floorPrice: uint256) - get the smallest possible price that's at max lowerSystemCoinMedianDeviation deviated from the redemption price and at least minSystemCoinMedianDeviation deviated

  • getSystemCoinCeilingDeviatedPrice(redemptionPrice: uint256) public view returns (ceilingPrice: uint256) - get the highest possible price that's at max upperSystemCoinMedianDeviation deviated from the redemption price and at least minSystemCoinMedianDeviation deviated

  • getCollateralFSMAndFinalSystemCoinPrices(systemCoinRedemptionPrice: uint256) public view returns (uint256, uint256) - get the collateral price from the FSM and the final system coin price that will be used when bidding in an auction

  • getSystemCoinMarketPrice() public view returns (priceFeed: uint256) - get the system coin's market price from systemCoinOracle

  • getFinalTokenPrices(systemCoinRedemptionPrice: uint256) public view returns (uint256, uint256) - get the collateral and system coin prices that can be currently used to determine the amount of collateral bought by bidders

  • getFinalBaseCollateralPrice(collateralFsmPriceFeedValue: uint256, collateralMedianPriceFeedValue: uint256) public view returns (uint256) - get the collateral price (without the discount applied) used in bidding by picking between the raw FSM and the oracle median price and taking into account deviation limits

  • getDiscountedCollateralPrice(collateralFsmPriceFeedValue: bytes32, collateralMedianPriceFeedValue: bytes32, systemCoinPriceFeedValue: uint256, customDiscount: uint256) public view returns (uint256) - get the (discounted) collateral price using either the FSM or median price for the collateral and the redemption/market price for the system coin

  • getNextCurrentDiscount(id: uint256) public view returns (uint256) - get the upcoming discount that will be used in a specific auction

  • getAdjustedBid(id: uint256, wad: uint256) public view returns (bool, uint256) - get the actual bid that will be used in an auction (taking into account the bidder input)

  • startAuction(forgoneCollateralReceiver: address, auctionIncomeRecipient: address, amountToRaise: uint256, amountToSell: uint256, initialBid: uint256 ) - function used by LiquidationEngine to start an auction / put collateral up for auction

  • getApproximateCollateralBought(id: uint256, wad: uint256) - get the amount of collateral that can be bought from a specific auction by bidding wad sysem coins and assuming that the latest system coin redemptionPrice is equal to lastReadRedemptionPrice

  • getCollateralBought(id: uint256, wad: uint256) returns (uint256, uint256) - get the amount of collateral that can be bought from a specific auction by bidding wad amount of system coins (where wad will be scaled by RAY to transfer the correct amount of RAD system coins from safeEngine.coinBalance)

  • buyCollateral(id: uint256, wad: uint256) - buy collateral from an auction and offer wad amount of system coins in return (where wad is scaled by RAY in order to transfer RAD amount of coins from the bidder's safeEngine.coinBalance)

  • settleAuction(id: uint256) - settle an auction that has passed its auctionDeadline and return any unsold collateral to the forgoneCollateralReceiver

  • terminateAuctionPrematurely(id: uint256) - normally used during GlobalSettlement to terminate an auction early and send unsold collateral to the msg.sender as well as call LiquidationEngine in order to subtract bids[auctionId].amountToRaise from LiquidationEngine.currentOnAuctionSystemCoins

  • bidAmount(id: uint256) public view returns (uint256) - always returns zero.

  • remainingAmountToSell(id: uint256) public view returns (uint256) - return the remaining collateral amount to sell from a specific auction.

  • forgoneCollateralReceiver(uint id) public view returns (address) - returns theforgoneCollateralReceiver for a specific auction.

  • raisedAmount(id: uint256) - returns zero.

  • amountToRaise(uint id) public view returns (uint256) - returns the amount of system coins left to raise by a specific auction.

Events

  • AddAuthorization - emitted when a new address becomes authorized. Contains:

    • account - the new authorized account

  • RemoveAuthorization - emitted when an address is de-authorized. Contains:

    • account - the address that was de-authorized

  • StartAuction- emitted when startAuction(address, address, uint256, uint256, uint256) is successfully executed. Contains:

    • id - auction id

    • auctionsStarted - amount of auctions started up until now

    • amountToSell - amount of collateral sold in the auction

    • initialBid - starting bid for the auction (usually zero).

    • amountToRaise - amount of system coins that should be raised by the auction.

    • startingDiscount - the initial discount offered in the auction.

    • maxDiscount - the max discount that can be offered in the auction.

    • perSecondDiscountUpdateRate - the pace at which the current discount in the auction is updated.

    • discountIncreaseDeadline - the deadline after which the current discount offered in the auction cannot increase anymore.

    • forgoneCollateralReceiver - receiver of leftover collateral (usually the SAFE whose collateral was confiscated by the LiquidationEngine).

    • auctionIncomeRecipient - receiver of system coins (usually the AccountingEngine).

  • ModifyParameters - emitted when a parameter is modified

  • BuyCollateral - emitted when someone buys collateral from an auction. Contains:

    • id - the ID of the auction from which collateral was bought

    • wad - the bid size

    • boughtCollateral - the amount of collateral that was bought

  • SettleAuction - emitted when someone settles an auction. Contains:

    • id - the ID of the auction settled

    • leftoverCollateral - the amount of collateral that hasn't been sold by the now settled auction

  • TerminateAuctionPrematurely - emitted when an auction is terminated before its deadline. Contains:

    • id - the ID of the auction that was terminated

    • sender - the address that terminated the auction

    • collateralAmount - the amount of collateral still unauctioned

3. Walkthrough

The bidding process in an increasing discount auction is almost identical to the one in fixed discount auctions.

The only difference is that increasing discount auctions start with a smaller discount which increases at a pace of perSecondDiscountUpdateRate per second. The discount will increase until it hitsmaxDiscount or until discountIncreaseDeadline passes.

4. Gotchas

Increasing discount auctions have the same gotchas as fixed discount ones.