Hybrid Dutch Auction Model
NFDomains has curated a list of around 2,000 desirable words and phrases to auction in a hybrid Dutch auction format.
Like a traditional Dutch auction, the price will start at the kick-off price, also known as the ceiling price, and every minute the price will drop until the floor (reserve price) is reached or it's purchased, whichever happens first.
Traditional Dutch Auction
Unlike traditional Dutch auctions, users are allowed to bid the floor price up in minimum bids of at least 10 ALGO. This makes for a dynamic auction where the high and low price can both change. Only one user can have the high bid at a time, with previous lower bids being refunded. When a user bids and increases the floor price, they're also shortening the auction.
When a user makes a bid, they're escrowing the ALGO to the NFD itself. When the price of the auction reaches less than or equal to the bid amount the NFD changes from a 'for sale' state to a 'reserved for' state. The NFD will be reserved for the winners address where they'll be able to claim it and receive any refund owed.
An overpayment is possible because the entire auction range is divided by the number of minutes in the auction, creating 1 'tick' per minute. If you bid above a tick and win, you will be refunded the amount over the tick you paid. If you paid 1,600 ALGO and the last tick was 1,500, you will receive an 100 ALGO refund when you claim the NFD.