Explore the unique features of Uniswap's new auction protocol CCP.

Overview: Felix, PANews

On November 13, Uniswap Labs announced the launch of the Continuous Clearing Auctions (CCA) protocol. This protocol is designed to help teams and developers quickly establish liquidity in Uniswap v4 and create fair market prices for new tokens with lower liquidity.

CCA is jointly designed by Uniswap Labs and Aztec Network, with Aztec contributing a ZK Passport module that supports private and verifiable participation. Aztec will also be the first project to launch using CCA.

Design Principles

The formation of liquidity often occurs behind the scenes, which can create an information gap, inevitably granting privileges to a select few participants and potentially leading to insufficient and unstable market liquidity. CCA, as an on-chain native solution, is designed around three principles:

First, it adopts a native on-chain market creation method, where the entire auction process from pricing, bidding to settlement is conducted transparently on-chain, without any “gatekeepers” and no off-chain transactions.

Secondly, it supports fair and gradual price discovery, with the token supply allocated during the auction period through a continuous clearing mechanism. This can incentivize users to bid early, reduce malicious bidding, lower market volatility, and help the market converge towards fair value.

Finally, the proceeds from the auction will automatically create a liquidity pool on Uniswap v4, thereby deepening liquidity.

protocol mechanism

The new auction mechanism CCA has a high degree of configurability, able to resist malicious sniping/bundling sales, and helps curb phenomena such as “market crashing” and “front-running.” The protocol allows projects to define the number of tokens available for sale, the starting price, and the auction duration. Users then place bids and specify their maximum price and total expenditure. These bids are non-retractable, and the maximum price is within a certain range. At the end of each block, the highest price at which all tokens within that block can be sold is determined. All participants who bid in that block pay the same liquidation price. The specific liquidity guiding process is as follows:

1. Configure Liquidity Guidance

The project team sets the price discovery parameters:

• Supply Release Plan Q(t), stipulates the release method of tokens over time.
• Price floor to prevent selling below the minimum valuation
• Duration, specified by the starting block and ending block.
• The graduation threshold that must be reached for successful deployment of liquidity

2. Price discovery through bidding

Participants determine market prices in the following ways:

• Clearly state the maximum price you are willing to pay
• Commit to spend a fixed amount of tokens
• Bids will be automatically allocated to all remaining auction periods based on the release schedule.

3. Continuous Price Clearing

As the auction progresses:

• Each new bid will create a checkpoint.
• The settlement price is calculated based on total demand and available supply.
• Prices will only rise or remain unchanged (will not decrease)
• The payment price for all participants is the same during this period.

4. Auction completed and price confirmed

When the price discovery process is complete:

• The system will check if the graduation threshold has been met.
• If graduated: The final settlement price will become the initial price of the fund pool.
• If not graduated: All bidders will receive a full refund and no funding pool will be created.

5. Liquidity Deployment

After the auction is successful:

• Bidders exit to calculate their final transaction amount and receive tokens
• The raised funds along with the remaining tokens will be deployed as liquidity to the Uniswap V4 pool.
• The pool is initialized with the discovered liquidation price.

Aztec is the first token issued using CCA.

Aztec Network, as the first token sale using the CCA mechanism, has an initial valuation (fully diluted valuation, FDV) of $350 million, which is a 75% discount compared to the valuation of Aztec Labs' last equity financing.

To prevent large investors from monopolizing the auction, there is a limit on the number of participants for each user. Early contributors and community members, including testnet operators, OG Aztec Connect users, and individual Ethereum stakers, can start bidding today. The public sale will take place from December 2 to 6, after which tokens can be directly withdrawn and staked on-chain.

Joe Andrews, co-founder of Aztec Labs, stated: “For years, token issuance has favored insiders at the expense of the community that drives innovation. The CCA developed in collaboration with Uniswap changes the definition of fair access in the crypto space—no special transactions, no hidden allocations.”

Uniswap founder Hayden Adams stated that the CCA protocol marks Uniswap's expansion from trading infrastructure to issuance infrastructure. Currently, CCA has been deployed on Ethereum and the sidechain Unichain, supporting customizable modularity suitable for a variety of token issuance scenarios ranging from meme coins to serious projects. In the coming months, the company plans to release more modules to further enhance the onboarding experience for projects and communities using CCA.

It is worth mentioning that, although the community praises CCA, some individuals express skepticism, stating that it is not much different from the Liquidity Bootstrapping Pool (LBP). As the core of the Uniswap Liquidity Launchpad, whether CCA can standardize DeFi issuance in the future and break the skepticism to become a mainstream tool by 2026 remains to be seen.

Related Reading: An Analysis of the New Protocol CCA Jointly Released by Uniswap and Aztec