0xc2d4f2d8…e413sent to0xf790a5f5…1365·#19,248,333·view on Etherscan
nounswap-auction-houseThere are two problems with framing the swap as an auction:
1) What an auction requires to be effective is demand for the item being sold. When it comes to a “swap” there is demand only from the swapping Nouner for the treasury Noun. It’s unlikely other Nouners will want to step in give up their Noun and ETH for the Noun being swapped. There will therefore be no competition for the swapped Noun and so no need for an auction. This defaults to the simple form of Noun + ETH for a swap but this is problematic because of point 2 below.
2) What an auction requires to be effective is a stable exchange of value between the item being sold and the funds being exchanged. In the case of a “swap” the mechanism can’t price the Nouner’s Noun and therefore the DAO can’t properly set a standard reserve price for all auctions. There are some instances where the Nouner’s Noun has an attribute which the DAO wants in the treasury and would accept less ETH as the starting price. Some circumstances would necessitate the opposite. Imagine an instance where a swap auction is started with Noun A and 5 ETH. A Nouner might have a better Noun B to swap and the DAO would take 4 ETH along with it, but the auction can only increment. Without considering the specific swap it is impossible to set an ETH value that effectively compensates the DAO for receiving the Nouner’s Noun or losing the treasury Noun.
The larger point in both arguments is that the auction attempts (again) to make Nouns fungible by not considering the unique properties of Nouns on both sides.