[bisq-network/proposals] Reverse Dutch Auction for the Donation address BTC (#148)

[ifarnung]

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I think quite a bit of efficiency could be gained for the BISQ DAO participants by changing the way the Donation address buys BSQ tokens from contributors.

Currently, the donation address gets all the BTC fees and the Donation address manager buys BSQ on the open market from BSQ sellers. This system does work pretty well so far and as a market maker I have no problem with it. But I think we could serve the contributors or other BSQ stakeholders by having a more fair and transparent way to buy and burn the BSQ that comes from BTC fees.

I propose a reverse dutch auction each time the Donation address would like to clear out the accumulated Bitcoin (once per month, or an X BTC threshold, for example, but the important thing would be for the sellers **to know when it was happening**)

Google's IPO used a Dutch auction to determine the price and it's well described here: (https://www.quora.com/How-was-Googles-IPO-unique)

In the case of BSQ, sellers would commit the number of BSQ tokens and the lowest price they would accept for those tokens.  All the offers would be counted up, and the donation address would calculate the price it should pay to use up all its bitcoin in buying BSQ tokens.  In this style of auction the final price paid is equal for all sellers, and it equals the price of highest priced seller that was included in the successful sellers group.

Simple examples:  Al offers 1000 BSQ at 7000 sats, Brad offers 1000 BSQ at 10000 sats, and Charlie offers 1000 BSQ at 120000 sats.  The Donation address needs to burn .15 BTC.  So the result would be Al selling 750 BSQ at 10000 sats and Brad selling 750 BSQ at 10000 sats.  This would burn .15 BTC.  If Al had offered 3000 BSQ at 7000 sats, the result would be Al selling 2143 BSQ for 7000 sats.

It would save a lot of time and effort for the contributor or other BSQ seller to be posting offers and jockeying for order book position in a very illiquid, not frequently traded market.

This post references: (https://github.com/bisq-network/roles/issues/80)

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