Dutch auctions have re-appeared and are regularly discussed within the crypto space. Raise uses a ‘Dutch auction’ as part of it’s bidding process, but what on earth is it?

It’s quite complicated, especially the understanding of the mechanics with modern day use but we hope that this post is a good attempt to explain it in a simpler format for you!

Where did it begin?

The origins of a Dutch auction date back to the 17th century and it’s so-named because it was implemented in the Flower Markets of Holland. 

We are all familiar with ‘English auctions', where bidding starts at a low price and raises until sold to the highest bidder (like eBay!), but the ‘Dutch auction’ is the opposite of this. In this type of auction, instead of buyers purchasing an offering at a fixed price, the process allows anyone to bid their own chosen quantity and price they are willing to pay.

Bidding starts at a high price and decreases over time, each time it reduces, buyers place their orders with the specified volume. Each round of bidding gives the buyer the opportunity to buy at a lower price, but early bidding is important as an auction could end at any moment!

Although Dutch auctions were originally used for products, it is becoming more and more common to be implemented with stocks, shares and financial solutions because prices are set by a fairer and more transparent method, which allows multiple types of customers to take part in the bidding process.

So how does Raise use it?

Raise has been built on three critical values: innovation, transparency and trust. Using a Dutch auction to unite our lenders and borrowers ensures that all our values are implemented through this process. 

Each borrower sets a request for the amount of money that they need. Lenders are then able to browse through and bid depending on their choice and their return on investment. Using a Dutch auction is the fairest way to ensure that lenders have complete control over their investment while the borrower has a solid opportunity to raise 100% of their funds. 

The APR may differ when the auction starts to when it finishes, but from a lenders point of view, this is great news. They will have the confidence that, after bidding at a certain APR, this rate could increase due to the Dutch auction and so, have a greater return on their investment.

All borrowers requests remain active and open until filled. Our vision for our growth will see a platform cram-packed full of different requests and investment opportunities. It’s a really exciting time to be a Raiser!

So what are you waiting for?

Become a lender today! - browse through borrower profiles and get started with one of our Dutch auctions!

We have focused Raise on user-experience and we know that we can always improve and this is why we would welcome any of your feedback regarding our Dutch auction process - just get in touch today!