# Impactful Auctions: Web3’s Opportunity to Revolutionize Public Goods Funding - Loring Harkness

- Channel: [ETH Belgrade Community](https://streameth.org/eth-belgrade-community)
- Date: 2025-10-07
- Duration: 22:40
- Watch: https://streameth.org/watch/yt-CPh3FJc3S98
- YouTube: https://www.youtube.com/watch?v=CPh3FJc3S98

## Description

Impactful Auctions: Web3’s Opportunity to Revolutionize Public Goods Funding - Loring Harkness | Paddle Battle

## Transcript

Give it up for me. Yeah, give it up. Okay, before we get started, I have a request. I want everyone to come to the front. Uh there will be some splashing, but yes, come up to the front. And there's two reasons why. The first is there's going to be a mad rush of people filing into the space and I don't want anyone to get trampled underfoot. The second is we're going to do a live auction and you guys need to participate. So, are you ready? >> Yeah. Okay. >> I can't hear you. >> Yeah. Okay. My name is Lauren Harkness. I'm one of the founders of Paddle Battle and we're an impactful auction platform, meaning that anyone can come to Paddle Battle and auction off cool and donate the money to public goods. So, what are we talking about when we talk about cool Ooh, this is cool It is a customdesigned DAP node home with your own PFP printed right on the lid. Cool And which public goods do we do fundraising for? Only the best in crypto. Uh, giveth, protocol guild, glow dollar, roadki, defy scan, dapn node, and many, many more. And I know what you're thinking. You're thinking, a impactful auctions. It's so cute. A how lovely. Why should I care? I'll give you three reasons. Number one, public goods. Public goods are amazing. Lighouses, the perfect example. Public goods, for those of you who don't know, are goods which are non-excludable and non-rivalous. And lighouses, as I mentioned, are the perfect example because if you're a ship in the sea, no one can prevent you from using a lighthouse for navigation. And you using the lighthouse for navigation does not diminish someone else's value from the same lighthouse. But it creates a problem, the free rider problem. It means that no boat in the ocean has an incentive to fund the building and maintenance of a lighthouse because no one can exclude them from using it. So why fund it? And as a result, this means that public goods are systematically underfunded. And so we just need more experiments on how to fund public goods. Paddle battle is one of them. Second of all, we are slaying moolok. For those of you who do not know, moolak is the god of coordination failure. Whenever there's a group of people who have a common goal but cannot align incentives and achieve their goal, the god Moolak is summoned. So, how do we align incentives and fund public goods? Well, typically public goods are funded using taxes. Yay, taxes. Uh, that's right. No one likes taxes because how do you know that your taxes are being well spent? So let's try another model. Let's try donations. No, same problem as the free rider problem. Systematically people do not donate as much as they should to public goods projects. So let's try a different mechanism. Let's try harnessing the power of games. And impactful auctions are a wonderful example of this alignment and incentives because when we have an impactful auction, we have these three actors, the hosts, the biders, and the projects that all engage out of self-interest, but somehow out of the froth and chaos of their interactions, public goods funding magically emerges. So, the hosts, they put something up for auction and donate the proceeds to public goods. The biders pay good money for cool So, they're acting out of self-interest. The projects are more than happy to promote the auctions because they get the public goods funding they desperately need to continue their good work. But what about the auction hosts? Aren't they donating the proceeds? Well, yeah, they are, but they're actually getting something much more valuable in return. Number one, they're getting enhanced branding as a leader in public goods funding. Number two, they're getting a viral marketing campaign, which is the auction itself. And number three, in many cases, they get a custom sales lead generation list. Because if you have an auction with 100 biders, one of them is going to win that DAP node home device and 99 have basically said, I'm willing to pay money for a DapNote home. We have their contact information and we can share it with DAP node so they can follow up with a special offer and complete those sales. And last but not least, impactful auctions are fun. Okay, reason number three, there is a ton of money in impactful auctions. This is not something we created. This already exists in web 2. And in fact, a couple years ago, it was a $7.5 billion industry and it's projected to grow to 17 billion by the end of the decade. And there are some huge companies already doing impactful auctions like eBay. So we can take this web 2 model and we can bring it to web 3 and as a result we can bring over those users as well. And if you think about it, crypto is actually a better stack for impactful auctions than web 2 because we have global payment rails. We have smart contract automation and we have trustless verifiability. But there's another reason why we want to bring impactful auctions to web 3. It's because these are the right type of users. They're not speculators or scammers or pump and dumpers. These are people who care about funding public goods. They are aligned with our mission and vision and we want them in web 3. And I should just give a shout out to several of my favorite projects because there are a lot of experiments happening with public goods funding models where you don't have to donate or make sacrifices. And some of my favorites include Glow Dollar, a stable to coin where just by holding it, you're donating passively to public goods. uh Lotto PGF and pool together which have lotteryies which fund public goods and octant v2 where Dows can put their treasury into a DeFi yield vault and use the yield to grow their community and fund public goods. Highly recommend you check these guys out. But I want to talk about novel auction mechanisms so that when you play paddle battle, you know the rules of the game. And more importantly, you know how to win. When you think of an auction, you probably think of this guy and he's going $1, $2, $3, $4, $5, $7, $10, $20. Sold. you know, the typical way that you auction off bullsemen, but this is an English auction. It's the most common type of auction. Uh, and it has a few hallmarks. Number one, it's open. Every bidder can see every bid in real time. It's ascending. It starts low and the bids get higher. And it's winner pays. So, the winner pays the their bid and receives the prize. All the other biders pay nothing and receive nothing. But I don't want to talk about English auctions. I want to talk about novel auction mechanisms. And I see you there in the audience. You look like this guy. You are highly skeptical. You are deeply afraid of new ideas. In fact, that's the reason you joined crypto. That's the reason why you're here today, right? Um, well, you're not the only one. Uh, many people are skeptical. Uh, Micah, for example, humans are very bad at some types of game problems, and Paddle Battle exploits that. People can play stupid games and win stupid prizes if they want, but I'm not a fan. to which I replied in the words of the immortal Gandalf, "Do not take me for some conjure of cheap tricks. I am not trying to rob you. I'm trying to help you." To which Micah replied, "Ah, I didn't realize the proceeds were being donated. That makes me less bothered." So with that said, open your mind, but more importantly, open your wallet because we are going to do an auction right here, right now. And like I said, you are going to participate. This is an allpay auction. It's a special type of auction where if you bid, you pay. You got that? You bid, you pay. And here we are auctioning off 100 dinara with Tesla's image printed on it. So do I have 10 dinara? Who would like to buy 100 dinara with 10 dinara? 10 10. Do I have 20? 20. Do I have 20 dinara to buy this? We've got 20. Do I have 30? Do I have 30 dinara? 30 dinara. Do I have uh 60 dinara? Do I have 60 dinara, 60 dinar? Do I have 80 dinar? 100 dinara to buy this 100 dinara. And remember, if you bid, you pay 100 dinara. We got it. Okay, I'm going to end the auction there. But notice just what happened. Because everybody pays, the total auction proceeds are far greater than the auction prize itself. And holy look what we have done. We have found the infinite money glitch. We have found the money printer. Go public goods. And I know what you're thinking. You're thinking, "We're just humoring him. This is a conference talk. This is not a real auction." Well, it's not. Paddle Battle's very first auction. We auctioned off $100 USD glow and we raised nearly $600. In fact, the highest bid for this 100 USD glow was $22. And this is an amazing auction mechanism and our users absolutely love it. In fact, the winner of this particular auction gave this rave review worst deal ever because she paid $22 for $100. Why? Well, she became the victim of the sunk cost fallacy. And it may seem like a good deal to pay 10 dinara to get a 100 dinara, but as soon as you bid, you're on that slippery slope fighting against the sunk cost fallacy, and it's hard to get off. Game theory is tough. So, what's the dominant strategy for an all pay auction? Well, you really have two choices. Number one, make sure you're in it to win it at any cost. Or number two, do not play. Okay, let's talk about another type of auction. This is a penny auction. And it's a very special type of auction where each bid is 1 cent higher than the previous bid. So each bid goes 1 cent, 2 cents, 3 cents, 4 cents, and so on. But here's the trick. Each bid has a bid fee of $1, and each bid resets the timer. So a penny auction is over when the timer reaches zero and the last bidder pays their bid and receives the prize. And you'll notice here that the vast majority of the auction proceeds do not come from the bid itself. They come from the bid fees. And this is what it feels like to pay a penny auction because the countdown timer is ticking down, down, down, down. And you think that the auction is going to be over and then someone submits a bid at the last second and the timer is reset and we start all over again. And penny auctions, I have to say, are horrible. If you play them, you will lose sleep. I played them. I lost hair. They are horrible. Okay, so we actually did this. We auctioned off a DAP node home device uh with a custom printed lid and we did it using a penny auction where the timer was set at 8 hours so that everyone around the world would have a fair opportunity to play. And someone on Twitter, Baston, actually did the math and he calculated that this auction would logically take 33 years to finish. Well, unfortunately, it did not. It lasted about 4 months and then one holiday weekend, a 4-day holiday weekend, everyone was away from their wallets. People forgot about the auction and a guy named Major ended up paying $65 for a $2,000 DAP node home device. Fortunately, we raised about $600 for roy privacy preserving local software uh portfolio tracking. Uh awesome project, please support it. Um, so what's the dominant strategy when playing a penny auction? You do not play to win. You merely play not to lose. Or in other words, you merely play to prevent other people from winning. So as the countdown timer is ticking down, down, if someone else submits their bid before you, that's wonderful. You don't need to bid. The countdown timer has been reset to eight hours and you can rest up until the countdown timer is in its final seconds once again. So your job is to bid as seldom as possible. My life advice here is do not chase your dreams. Remember humans are persistence predators. Quietly stalk your dreams until they get fatigued, fall asleep, and then you can slit their throats. The next type of auction I want to talk about is a sealed bid auction. And a sealed bid auction is a lot like an English auction, except for there's one key difference. Instead of all of the bids being open, they are encrypted by the biders and they remain encrypted until the end of the bidding period at which point all of the bids are decrypted and the highest bidder is revealed. The highest bidder pays their bid and receives the prize. And so this is kind of like being blind because you can't see what other biders are doing. Um, and we're actually using the shutter API. We're utilizing commit and reveal threshold encryption in order to make sure that the sealed bid auctions are fair and credibly neutral and do not rely on a trusted third party. And this is a wonderful type of auction. It's actually a superior type of auction because uh sealed bid auctions on average uh gather 9% higher uh more biders than English auctions and the highest bid on average is 166% of English auctions. It's also a nice type of auction because the dominant strategy is actually quite intuitive and it feels really nice. You just bid your perceived value and then you wait. There's no drama. But when all of the bids are decrypted, you'll see whether or not you are the highest bidder. And if you're not the highest bidder, it probably just means that someone else valued the item more than you do. And that's fine. But at Paddle Battle, we are on a mission to fund public goods and also to experiment with novel auction mechanisms. So, we're going to be experimenting with things like popcorn bidding, uh, which is an anti- sniping device, uh, team auctions, uh, maybe even yield auctions, harnessing the power of DeFi yield vaults. Um, again, we're not the only ones uh doing these experiments. I want to give a shout out to Tim Clancy who recently ran this wonderful hybrid auction, Malades for Myamma. It's a hybrid auction because they had an allpay auction. Um, and the winner of the all pay auction got one Maady, but they also had a lucky draw. So every dollar that you bid in the all pay auction gave you a ticket for the lucky draw and uh the winner of the lucky draw got a different mady. Um Vitalik actually won the all pay auction with a high bid of 10 ETH and the winner of the lucky draw was someone who had a 0.02% chance of winning. So kudos to them and kudos to Lucky Draws. Again, not just auctions, but there are many different ways that we can slay Moolock and fund public goods. So again, shout out to these wonderful projects. Uh do uh test them out and support them. Again, my name is Lauren Harkness and this has been a brief introduction to Paddle Battle. And Paddle Battle is a platform where anyone can auction off cool and donate the money to public goods. If you're interested in learning more about us, head over to paddlebattle.auction or on Twitter paddlebattles. Thank you so much. Hey, big applause. We can start the Q&A session. So, uh, do we have one question? Do we have two? Do we want Uh gentleman in the middle. Yeah. Yeah. There we have a question there. >> So uh okay. Um would these be regulated as as um games of luck in some countries as like betting or not or is this completely like you know clear? So Paddlebattle is a project of Brainbot which is a company based in Germany and Germany does have a framework for auction platforms and um we are in full compliance with that framework. It's a completely different category than lotteryies or lucky draws or uh games of chance of any kind. >> Any other questions? Going once, going twice, going. Okay, if that's it, let's give a huge applause. Thank you so much.