Perpetual Auction

Goods in hands of most valuing individual.

The Perpetual Auction is an economic concept that proposes the sale of assets through public auctions, rather than listing them for sale at a fixed price. Proposed auctions are perpetual - the subject of the auction is not the item itself, but only the ephemeral right to use this good for a specified period of time. The auctioned ownership period over a given good must be finite (as discussed in the Ephemeral Owner chapter), and upon its conclusion, the good must re-enter auction.

Furthermore, the asset must also be available for sale during the ownership period. Auction winners are required to set a price to relinquish their periodic ownership rights. The price is publicly announced, and all market participants are allowed to force the sale.

To counteract the declaration of excessively high prices (thus preventing other market participants from accessing the asset), a Harberger Tax is calculated based on the declared value.

The perpetual auction is a concept with incredibly many applications and benefits. Most importantly, the perpetual auction guarantees that the owner of a given asset at any given time is the person who temporarily values the good the most. If this was not the case, they would be outbid during the auction, or another buyer, who desires the asset more than its current owner, would purchase the good on the free market, at the value declared by the current owner.

This way, we achieve the most efficient, dynamic resource management system. By utilizing the concept of the Perpetual Auction, access to a given resource will always be held by the person who can use it most productively (where productivity does not have to be understood in a financial sense). If a given individual can use the good more productively and generate greater value than the currently established price, then the good will be acquired by them.

The Perpetual Auction has incredibly many applications. It can be an excellent market for trading temporary access to resources or people. An example application is consulting or employment, where an expert or advisor, by issuing a token through a perpetual auction, is assured that their client will always be the person who values their services the highest. In this way, they do not need to set fixed prices for their services but are guaranteed to always be paid the most possible at any given moment in the market. This application is currently developed by Hourglass Protocol. You can read more about it in Consumer Product chapter.

Other examples of the perpetual auction's application could include trading access to closed communities, software licenses, access to computing power, or language models.

The possibilities are limitless, and the Hourglass Protocol will find its application in any case where a hard-to-access, limited resource is for sale.