No art marketplace would be complete without an auction house, which is why SuperRare has expanded upon its core set of smart contracts to introduce Auctions. But delivering the excitement of a live, peer-to-peer digital auction within a smart contract-enabled art marketplace introduces certain risks for auction participants. SuperRare is steadily progressing the decentralization of art through these new market mechanics, but not without ensuring that its Users understand, acknowledge, and accept the risks of participating in Auctions.
The SuperRare Marketplace facilitates two different time-based auction formats - Scheduled Auctions and Reserve Auctions. Any Owner may use the SuperRare Platform to initiate at his or her sole discretion a time-based Auction for the sale of one or more SuperRare Items ("Artworks" or "Works"). These Terms explain the basic mechanics and risks involved in each Auction format and provide best practices for initiating and participating in Auctions. For a more detailed explanation on the Auction mechanics and features, please visit our Auction Feature Walkthrough.
In a Scheduled Auction, the Owner establishes a specific start and end time for an Auction for an artwork to go live. Owners may optionally include a Starting Price. As long as the Starting Price is met by an Auction Participant, the work will be sold. Works without a Starting Price will be sold to the highest bidder, no matter what the bid is.
<aside> ☝ A Scheduled Auction may be cancelled prior to the start of the auction, i.e. when it is counting down to kick off. After the auction begins, it cannot be stopped, cancelled, or undone. Owners that initiate Scheduled Auctions should be prepared to sell their works at the Starting Price, or at any price if no Starting Price is established.
In a Reserve Auction, an Auction for an artwork is configured to automatically go live once a bid is received equal or greater to a public Reserve Price established by the Owner. Once the Reserve Price is met, the Auction is instantiated and configured to last for approximately 24-hours. The work goes to the highest bidder at the end of the Auction.
<aside> 🛑 Once the timed portion of a Reserve Auction has begun (i.e. after the Reserve Price is met), the auction cannot be stopped, cancelled, or undone. Owners that initiate Reserve Auctions should be prepared to sell the work at the Reserve Price and should make absolutely sure that they entered the Reserve Price correctly.
Once initiated, both Scheduled and Reserve Auctions last for a discrete window of time (between 1 hour and up to 7 days for Scheduled Auctions and approximately 24 hours for Reserve Auctions). If a bid is placed within the last 15 minutes of an Auction, the auction time is extended by 15 minutes from the time of the bid in order to accommodate last minute bids. However, timing is not such a simple or exact thing on the blockchain. SuperRare Auctions are run and settled directly on Ethereum, and are therefore based on block time, not conventional time. The countdown timers in the UI are an approximation based on the average block completion time of the Ethereum blockchain.
<aside> ⏰ Auction timers are not exact and only represent an approximate as to the start or end time remaining for a particular Auction. Participants should get their bids in as early as possible to ensure that they are processed by the Auction smart contract before the close of the Auction.
SuperRare applies the same fee structure to works sold in Auctions as other methods. A 3% transaction fee is charged to the Buyer of the work, and on primary sales a 15% commission is charged to the Seller. Royalties are also still in effect for works sold during an Auction. Collectors who are selling works that they didn't create (i.e., a secondary market sale) will automatically be charged 10% of the total sales price payable to the Artist. A more detailed breakdown of the SuperRare fees and royalties can be found in our Terms of Service.
Smart contracts are like computer programs that run on the blockchain. But unlike ordinary computer programs, smart contracts on the Ethereum blockchain (the SuperRare native blockchain) are executed by a decentralized virtual machine, meaning that they are outside of the control of any one party, including SuperRare, and are subject to many risks and uncertainties. We chose to power our Auctions with smart contracts because they radically disrupt the ability of Artists to monetize their creations and engage with Collectors, but its imperative that every Auction Participant understands the risks of smart contract-enabled Auctions.
Simply put, once an auction is initiated it cannot be stopped. If a Scheduled Auction is not cancelled before the established start time the Scheduled ****Auction will automatically be initiated and the auctioned works will be sold as long as the Starting Bid Price is met (or if any bid is received for Scheduled Auctions without a Starting Bid Price). Similarly, if a Reserve Auction is not cancelled before someone places a bid that satisfies the established Reserve Price, the Reserve Auction will automatically be initiated and work will be sold even if there are no other bids placed.