Author: Zhixiong Pan

Let's talk about the new protocol CCA jointly released by Uniswap and Aztec, which stands for "Continuous Clearing Auction." It is specifically designed for price discovery and liquidity initiation for new assets. After the auction process concludes, the project team can import the raised funds and tokens into Uniswap v4, connecting to the secondary market for trading.

The core demand of this protocol is to solve the problem of "how to price new assets." Historically, there have been many approaches: team airdrops (essentially free giveaways), Dutch auctions, fixed price sales, as well as LBP, Bonding Curves, etc. Essentially, they all involve "selling a portion of tokens to the earliest participants through some mechanism."

However, from Uniswap's perspective, these existing mechanisms each have their pitfalls: some pricing is very random, some are extremely time-sensitive, and some cannot provide continuous liquidity. Therefore, they hope that CCA can simultaneously address two things: relatively fair price discovery and smooth, sustainable liquidity initiation.

Essentially, CCA is a protocol independent of Uniswap v4, comprising a complete set of issuance and pricing frameworks. However, it can also connect with the AMM core through Uniswap v4's hooks mechanism, especially after the CCA auction is completed, automatically injecting liquidity into Uniswap v4's smart contracts.

So what is Aztec's relationship with this? Aztec's involvement in this matter is actually quite deep: they not only participated in the mechanism design of CCA but also became the first project to use CCA for token auctions. Additionally, the CCA protocol itself can accommodate KYC/compliance capabilities; Aztec's auction utilized an identity verification feature called ZKPassport, which is a project within the Aztec ecosystem, developed using their Noir language, completing compliance checks through zero-knowledge proofs without exposing user privacy details.

Returning to CCA, it is not a "one-size-fits-all" solution with fixed rules but rather provides a configurable auction framework. It can roughly be broken down into the following steps:

1. Configuration Phase: The auction initiator first sets the rules on-chain, such as start and end times, how many "rounds" or time periods the auction is divided into, what proportion of tokens is released in each time period, the minimum price (floor price), whether a whitelist/identity verification is required, and how to inject liquidity into Uniswap v4 after the auction ends, etc.
2. Bidding Phase: During the auction, participants can bid at any time, with each bid containing two parameters: how much capital is invested and the maximum acceptable unit price. Participants can also continue to add or adjust bids, with each order being independently recorded.
3. Distribution Phase: The system will automatically spread a bid across the remaining "release periods." Therefore, the earlier a bid is made, the more time periods the participant can engage in, allowing for participation in more rounds of clearing.
4. Clearing Phase: In each round, the system will accumulate all valid bids for that round and then use a unified rule to find a price that can sell all the tokens to be released in that round. This price becomes the final transaction price for that round. All bids with a max_price equal to or above this price will receive corresponding shares according to the rules in that round.
5. Conclusion: When all rounds are completed, the entire auction is declared finished. Participants can claim the tokens they have obtained and the portion of funds that were not transacted; the protocol will then inject the raised assets and the other side of assets prepared by the project team into Uniswap v4 according to the pre-agreed strategy, officially launching the liquidity pool for the secondary market.

I think it resembles slicing traditional "one-time auctions" into time segments: no longer settling all at once at a specific moment, but breaking a large round into multiple smaller phases, allowing price and game theory to unfold over the timeline. This is precisely why it is named "Continuous Clearing Auction."

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