Overview: Felix, PANews

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

CCA was co-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 privileging a few participants and potentially leading to insufficient and unstable market liquidity. As an on-chain native solution, CCA is designed around three principles:

First, it adopts an on-chain native market creation method, with the entire auction process from pricing, bidding to settlement being transparently conducted on-chain, without "gatekeepers" or off-chain transactions.

Second, it supports fair and gradual price discovery, with token supply being allocated through a continuous clearing mechanism during the auction. 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 is highly configurable, capable of resisting malicious buyouts/bundling, and helps curb phenomena such as "dumping" and "front-running." The protocol allows projects to define the number of tokens available for sale, the starting price, and the duration of the auction. 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 can be sold within that block is determined. All participants who bid in that block pay the same clearing price. The specific liquidity guidance process is as follows:

1. Configure Liquidity Guidance

Project teams set price discovery parameters:

• Supply release schedule Q(t), specifying how tokens are released over time
• Price floor to prevent sales below the minimum valuation
• Duration specified by the starting and ending blocks
• Graduation threshold that must be met for successful liquidity deployment

2. Price Discovery through Bidding

Participants determine the market price by:

• Clearly stating the maximum price they are willing to pay
• Committing to spend a fixed amount of tokens
• Bids will be automatically allocated according to the release schedule across all remaining auction periods

3. Continuous Price Clearing

As the auction progresses:

• Each new round of bidding creates a checkpoint
• The clearing price is calculated based on total demand and available supply
• The price will only rise or remain unchanged (it will not decrease)
• All participants' payment prices during that period are the same

4. Auction Completion and Price Determination

When the price discovery process ends:

• The system checks if the graduation threshold has been met
• If graduated: the final clearing price will become the initial price of the liquidity pool
• If not graduated: all bidders will receive a full refund and no liquidity pool will be created

5. Liquidity Deployment

After a successful auction:

• Bidders exit to calculate their final transaction amount and receive tokens
• The raised funds plus the remaining tokens will be deployed as liquidity to the Uniswap V4 pool
• This pool is initialized at the discovered clearing price

Aztec Becomes 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 from Aztec Labs' last equity financing.

To prevent large investors from monopolizing the auction, there is a limit on the number of participations per 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 deals, no hidden allocations."

Uniswap founder Hayden Adams remarked 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 various token issuance scenarios, 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 while the community has praised CCA, some individuals have expressed skepticism, claiming it is not much different from liquidity bootstrapping pools (LBP). As the core of the Uniswap Liquidity Launchpad, whether CCA can standardize DeFi issuance and break the skepticism to become a mainstream tool by 2026 remains to be seen.

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

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