Auctions

There are three auction types in the dai system, the collateral auction (flip-auction), the debt auction (flop-auction) and the surplus auction (flap-auction). Flap and Flop auctions are initiated by the Vow. Collateral auctions are initiated by the Cat.

Flap - surplus auction

Flap is the simplest of the auctions, where surplus Dai is sold for MKR. Bidders complete for lot amount of Dai with increasing bid amounts of MKR.

Flop - debt auction

Bidders complete for bid amount of Dai with decreasing lot amounts of MKR.

Flip - collateral auction

In the tend-phase bidders compete for increasing amounts (bid) of Gem. Once tab amount of Dai has been raised the auction moves to the dent-phase. During the dent-phase bidders can compete for decreasing amounts (lot) of Gem for tab amount of Dai. Forfeited Gem is returned to the liquidated Urn.