Auction Rounds

Daily Auctions: VTX tokens are distributed through daily auctions, where participants bid using reserve assets. These auctions are the sole method for acquiring VTX tokens directly from the protocol.

You want to acquire as much VTX as possible; price should be irrelevant. The more VTX you have, the more power you earn within our economy.

Auction Mechanics

• Fixed Supply: Each round distributes a fixed supply of VTX tokens, made known at the round's onset.

• Participation Process: Participants deposit USDC for a share of the total VTX supply to be distributed by the ongoing round. In order to prevent price manipulation, deposits made during a round may not be withdrawn.

• Proportional Distribution: At the end of each round, USDC deposits are summed and VTX tokens are distributed proportionally to each participant's share of the total USDC pool, according to

$$\text{VTX Received} = \text{Round Supply} \cdot \dfrac{\text{User Deposits}}{\text{Total Deposits}}$$

• Price Discovery: After each round, the price of each VTX token is effectively the aggregate USDC pool amount divided by the issued supply. As such, each round serves as a discrete price discovery event for VTX, where the new price is

$$\text{Price} = \dfrac{\text{Total Deposits}}{\text{Round Supply}}$$

• Reserve Price: Each auction is subject to a reserve price of 1 USDC per VTX. If this reserve price is not met due to too small of a USDC pool, then the auction is voided, deposits are returned, and the emission schedule is adjusted as described below. This is necessary for ensuring that each VTX token is backed by at least 1 USDC.

Emission Schedule

The emission schedule follows a simple sequence defined by the following rules, where $S_n$ defines the supply of AURA issued in auction $n$:

• $S_1 = 100$

• If auction $n$ is successful, then $S_{n+1} = S_{n}$

• If auction $n$ is voided, then $S_{n+1} = \text{round} (0.9 \cdot S_n)$

In words, this emission schedule interprets voided auctions as decreases in demand, and responds by reducing the supply made available in the following auction.