Please describe your proposed solution.
1). Related works
Vietnam recently approved the National Digital Transformation Programme by 2025, with an orientation towards 2030. The National Programme prioritizes 8 different sectors for this digital transformation, auction industry is one of the most promising areas in the e-Commerce sector.
Digital transformation is a must-have battle for auction houses, it helps them keep up with emerging customer demands and therefore survive in the face of the future. The Sotheby auction house is focusing on adapting digital technologies to their online art auctions. Christie's approach is auctioning NFT artworks via their own marketplace called "Makersplace".
We are Lac Viet Technology JSC, a company that belongs to Lac Viet Auction House, the owner of the first patented and government-authorized auction platform in Vietnam. Since 2019, we have been selling state-owned assets via our online auction platform on behalf of the Vietnamese government. Below is a glance at the platform.
The below figure is the evolution of our platform with an O2O event.
> On Aug 08, 2023, we were the first Auction House who apply blockchain technology to the online auction platform in Vietnam.
2). Existing problems
- <u>Business's point of view</u>
- Auction industry's point of view
- According to scientific research, the main problems that need to be solved are:
- Auction fraud - 70% of bidders often worry that they aren’t paying a fair price and the result was cheated.
- Auction results depend on the auctioneer & auction house’s reputation
- Cryptocurrency deposit & payment.
- Cardano ecosystem's point of view
- According to dAppRadar, the ecosystem is lacking dApp and users in volume & quality
- No dApp for auctioning rare & extraordinary tangible items and state-owned assets
- Obstacles blocking the mass-adoption
- there is no enabling environment for cryptocurrencies to use in real life
- the complexity of using cryptocurrency.
- The Bidder, the Seller ( government & individual), and the Auctioneer's point of view
- According to the Law on asset auction: Tangible assets that as prescribed by law must be sold via auction comprise State-owned assets,…
- The seller is looking for a solution to restrict collusion and reduce price, especially for government properties being auctioned off.
<u>b. System's point of view</u>
Both business and system problems show the huge need for a next-generation of auction platform in real life. That is why the Cardano smart contracts-based auction platform is proposed.
3). Proposed solution
The next generation of the auctioning platform comprises 03 pillars: Business solution, System solution, and solution for an acceleration of blockchain adoption.
<u>3.1. System solution</u>
By integrating Cardano-based smart contracts into our existing auction platform, the identity of the person who is a bidder or winner (successful bidder) is anonymous to everyone. Transaction data are stored on blockchain and the winner is decided automatically by smart contracts so the results can not be cheated.
<u>3.2. Business solution</u>
The goal for this section is to bring more users to both: the new auction platform & Cardano blockchain space and then keep them longer in the space.
Let's start with a simplified O2O ( online to offline and offline to online) user journey as below figure.
- New users can be acquired via both online (Google search ads, Facebook ads or download a mobile app via app stores,..) marketing campaigns and offline ( visit auction houses & our auction coffee shops ) events.
- Account registration & bidding deposit are a must for auctioning state-owned assets according to the Vietnam Law on asset auction.
- A Cardano-based wallet address will be created during account registration. The address will be used for receiving deposits or earning rewards.
- According to the law on asset auction, the bidder had to deposit 20% ( 2-4 weeks in advance) of the price of the auctioning assets to be eligible for bidding. We accept ADA as a deposit. ADA will be staked to earn interest. Usually, the price of state-owned assets is very expensive ( millions of USD), so earning interest is one of the main revenue streams for the platform besides the bidding transaction fee.
- Smart contracts will decide who is the winner ( successful bidder) and the bidding transaction will be stored on the blockchain for transparency. It also sends back deposits to unsuccessful bidders' wallets.
- State-own assets will be sent to the winner by one of our partners ( the auction house) via a traditional process.
We proposed the Bid-to-Earn model with B2E token to encourage bidders to use ADA for bidding deposits instead of using FIAT. It also brings new users and converts existing non-crypto users to crypto users via a rewarding program as the following figure.
The Cardano blockchain-based smart contracts auction platform operates as a generated sales for auction houses ( Partners). The partners will pay a sale commission when the platform finds a successful bidder ( winner). The auction platform takes a small part of the sales commission ( 1 to 10%), the remaining will be converted to the ADA and then rewarded to the winner's wallet & newly registered users' wallet. It encourages existing non-crypto users to create new Cardano-based wallets to receive ADA.
The platform also on behalf of the Auction houses takes bidding deposits, one of the advantages of using ADA instead of FIAT for bidding deposits is the bidder's earning interest via the platform's staking pool. In the traditional way, the bidder had to deposit 20% in FIAT ( 2-4 weeks in advance) of the price of the auctioning assets to a locked bank account to be eligible for bidding. There is no interest and the process to return the deposit is time-consuming.