⚖️Reserve Auctions

Overview

Moonwell Reserve Auctions is an automated onchain system that facilitates the exchange of reserve tokens for WELL tokens. The system offers a unique opportunity for searchers to bid and sell WELL tokens at a discounted rate.

Auction Structure

Structure

• Total Duration: Each auction cycle lasts 2 weeks

• Mini-Auction Periods: Divided into 56 separate 6-hour mini-auctions

• Market Separation: Each market has its own dedicated auction contract

Dynamic Pricing System

• Starting Price: Each 6-hour mini-auction begins with a premium above market price

• Price Decay: The premium declines linearly throughout the period

• Ending Price: By the end of each mini-auction, price reaches maximum discount

• Key Parameters:

  • startingPremium: Initial premium rate (>100%, represented as >1e18)

  • maxDiscount: Maximum discount reached (<100%, represented as <1e18)

Participation Guide

1. Monitoring Auction Opportunities

How to check for active auctions:

• Query the saleStartTime and saleWindow in the ReserveAutomation contract

• Use getCurrentPeriodStartTime() to identify the current mini-auction period

• Check available reserves with getCurrentPeriodRemainingReserves()

Best time to participate:

• Early in the period: Higher reserve availability but lower discount

• Later in the period: Better discount but risk of depleted reserves

2. Preparing to Bid

Before bidding, calculate the expected output:

• Use getAmountOut(uint256 amountWellIn)to calculate how many reserve tokens you'll receive for a given WELL amount

• Prices are determined using Chainlink price feeds for both WELL and the reserve asset

3. Placing a Bid

• Ensure you have sufficient WELL tokens in your wallet

• Approve the ReserveAutomation contract to spend your WELL tokens

• Call getReserves(uint256, uint256)with your desired WELL amount and the expected reserve amount

• Reserve tokens are transferred immediately after the transaction succeeds

4. Best Practices

• Monitor Chainlink price feeds to identify optimal bidding opportunities

• Check remaining reserves in the current period before bidding

• Be aware of the current discount rate based on time elapsed

• Ensure you have sufficient WELL tokens before bidding

Technical Details

Price Calculation Workflow

1. Oracle Price Retrieval:

   • System fetches normalized prices (18 decimals) from Chainlink oracles for both WELL and reserve assets

2. Calculate Current Discount Rate:

decayDelta = startingPremium - maxDiscount
periodDuration = periodEnd - periodStart
timeRemaining = periodEnd - block.timestampe
currentDiscount = maxDiscount + (decayDelta * timeRemaining) / periodDuration

1. Calculate Final Amount:

// Convert WELL to USD value
wellAmountUSD = amountWellIn * normalizedWellPrice

// Apply discount to reserve asset price
discountedReservePrice = normalizedReservePrice * currentDiscount / 1e18

// Calculate output amount
amountOut = wellAmountUSD / discountedReservePrice

Contract Addresses

Base

Market	Address	Explorer
USDC	0x8373155335839e3D078f3F224E8B6618Fc26eF17	View
USDBC	0x89b89c30E2f60Bd30059c3924eF5b8c0Fcd1B64A	View
DAI	0x9f2ca3c6Cd1dddb7aD473a0a893C3104E2af15Ad	View
WETH	0x064D8Cb3B7a22F4cFBdd602eBC7E722Bb71405D8	View
cbETH	0x48bc4876D33Db30929c373c3B949b66CB8d641F3	View
wstETH	0xbd22DaFeF550094A32f388CD256FE133a0A14387	View
rETH	0xEfE30785362225106367039971d82715dcB35192	View
AERO	0xc7840e86A0aa22c23BCbC153CE61f6009733bf2C	View
weETH	0x75494780E76bB41c0fDf29DBA4b2Ce82501c12b0	View
cbBTC	0x83D37e3df05F1507667AF4dfc83Ec8A38Cf2dA08	View
EURC	0x7bBe5972e01BAc64fE3AD7EFfBa6D164f0a1F15f	View
wrsETH	0xe34D7D109B97e1b1DAc9A9920e6A6769814Ac7eE	View
USDS	0xA078017f827DC7B8540C98A3bF7b2153B2aF6cB3	View
TBTC	0x84C74431200Bcd3Ba4b557024734891857b43354	View
LBTC	0xf8f7b937a4CC6Cc16b600B3611ce0c1152a5b3F9	View

OP Mainnet

Market	Address	Explorer
USDC	0x475d7c6999dc27E640d260aBf9f2fA9333E472CF	View
USDT	0x9E58891D8DF4e6Dd8bAfD3082A59B72C51202841	View
DAI	0xE6Aea947c0F082c5Dc751BB9C7f44Ce059590962	View
WETH	0x080D64570a58FF87E14CC5Cb91d1aaB26b15CFDc	View
cbETH	0x8455D94e412A498Df8727D904252892Fb111a4cD	View
wstETH	0x01c369a6238226702E48C9C3fBB1de33F4b05D74	View
rETH	0x9E530e9F3f9b1046e223cc3eB97fA0bBab5Dd993	View
OP	0x6427D36153dE11b694d70604B0715790769024f7	View
VELO	0x589F59fBDB5952920fA557c924F6f5CFf184b155	View
weETH	0x3B40085872eaEA59CF39FCafFb3dc36085aE48f6	View
wrsETH	0xFfF466528fE1a18b95Fa910C96540A70EC2727FB	View
WBTC	0x78a9C06188195CEE3cBf67303a1708cb8765b9ec	View

Frequently Asked Questions

What is the benefit of participating in reserve auctions?

Participants can acquire reserve tokens at potentially discounted rates compared to market prices, with discounts improving as each mini-auction progresses.

How is the price determined in an auction?

Prices are derived from Chainlink oracle feeds for both WELL and reserve tokens, with a dynamic discount that increases linearly throughout each 6-hour mini-auction period.

Can I participate in multiple auctions simultaneously?

Yes, each market has its own auction contract, allowing you to participate in multiple auctions across different reserve assets.

What happens if the reserves run out during an auction period?

You'll need to wait for the next mini-auction period when new reserves become available.

Is there a minimum or maximum bid amount?

There is no enforced minimum or maximum, but transaction costs should be considered for smaller bids, and larger bids may be limited by available reserves.