Dutch Auctions are a popular auction mechanism used in traditional markets for IPOs share allotments, and U.S Treasury debt instruments. However, as an AMM primitive, they have been underwhelming.
In a Dutch auction, prices start high and reduce until a buyer has been found. Participants of a Dutch auction can decide when they are happy to commit funds. They can either wait in hopes of a price reduction over the course of the auction or risk missing out completely if the token is sold out.
Dutch auctions differ from other types of markets in that there are multiple buyers but only one seller. Although it has a perfect use case for teams to conduct public token sales in a completely decentralized manner, Dutch auctions aren’t suitable for secondary market exchanges.