Encrypted bid submission is a process where participants in an auction or tender transmit their offers using cryptographic methods that conceal the bid’s content. The bids remain private until a predetermined opening time or condition is met. This technique prevents front-running, collusion, and other forms of manipulation. It ensures a fair and secure bidding environment for all parties.
Context
In decentralized finance (DeFi) and non-fungible token (NFT) marketplaces, encrypted bid submission is a crucial element for designing secure and transparent auction mechanisms. It helps mitigate issues like miner extractable value (MEV) by preventing early observation of bids. This technology promotes equitable participation and accurate price discovery in digital asset sales, enhancing trust in blockchain-based marketplaces.
A new cryptographic second-price auction enforces off-chain influence proofness, fundamentally securing transaction fee mechanisms against miner censorship and rent-seeking.
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