How to Use Dutch Auction on OpenSea – Ultimate Guide
Going Dutch doesn’t mean you have to be cheap with your NFT.
Let’s understand what is a Dutch auction and how it could benefit you when selling your NFTs. OpenSea offers two types of timed auctions when selling your NFTs.
- Sell to highest bidder – Accept many bids and the highest bidder wins. Also called English auction.
- Sell with declining price – As the price is reducing, whoever bids first gets the NFT. This is Dutch auction.
Dutch Auction Explained
Not the most popular option when conducting an auction but this Dutch version has its use. It’s an auction conducted by setting a starting and ending price. The starting price is higher than the ending price and the time duration is set for the price to drop – from high to low. Bidders are enticed to bid at the price they are willing to pay.
In OpenSea, the first person who bids for the NFT wins because there’s only one NFT for sale. But some other Dutch auctions actually could have multiple stocks of the same item. So instead of just having one bidder, they can be many people bidding at the prices they want.
But the risk is that you might end up with nothing if others are willing to pay a higher price than you.
An Analogy of Dutch Auction
Suppose you’re at a supermarket and it’s two hours from closing time. There is some meat left on the counter. The seller needs to sell them off before they close the door. It’s still kind of early, so they give a discount of 20%. You hesitate thinking maybe the meat price will go down further and you’re in no rush. But another shopper needs to leave fast, so she buys one.
Now, it’s one hour before closing and there are still some left. So, what do you know, they increase the discount to 50%. Still, you’re reluctant to pay for it. But there are only a few stocks left. You’ll take a chance because you’re not a big meat eater anyway.
Finally, the price goes down further to the final price they’re willing to offer with three stocks left. 70% discount written on the price board. You rushed in to buy and walk away smiling ear to ear.
That is probably something closest to Dutch auction that we had experienced.
Why and When to Run a Dutch Auction
Dutch auction was invented to clear up stocks quickly, as demonstrated in the analogy above. Instead of throwing your price and selling for a low margin, you can set a higher price and slowly wait until someone bids or buys at a specific price that a specific time. This way you can hope to sell at the highest price that market would bear.
You want to utilize Dutch auction when you’re desperate to sell. So, if you have many NFTs that you wish to dispose of quickly, a Dutch can be your friend.
Now before we decided to go Dutch, you should be able to inform enough potential buyers about your auction. Otherwise, if you don’t get enough demand for your precious NFT, you’ll end up selling for pennies. But still, you can set a floor price – the lowest price you’re willing to go.
How to Go Dutch on OpenSea
Assuming you have created your NFT on OpenSea, here are the steps.
- On your NFT detail page, press the “Sell” button on the top right button.
- On the next page, you need to select “Timed Auction” and choose the “Sell with declining price” as the method.
- Next, enter your starting price. Remember, your starting price must be higher than your ending price.
- And then, set the duration of your auction. The auction system will gradually reduce the price throughout this time period. The minimum is a day and the maximum is 6 months. You should set a period when you are able to generate adequate traffic to your NFT.
- Finally, decide on your ending price – the lowest price you are willing to sell for.
Should You Choose Dutch Auction
It depends. If you need to sell off an NFT quickly, this could be an option. Remember, this method was invented during the old days when marketplaces in the Netherlands were overcrowded and disorganized. So, it was created to get buyers in and out of the place rapidly while allowing the sellers to sell at a high price.
So, if you’re in a similar situation, this auction option may work for you. Good luck!