Implementing decentralized auctions using blockchain smart contracts

Rapid advances in ecommerce and changing consumer preferences have contributed to the growing popularity of online auctioning platforms such as eBay. Online platforms provide some advantages to consumers such as product variety, deals on prices and mitigate geographical barriers. Nevertheless, existing auction platforms are centralized and depend on third-party intermediaries for transaction settlement. As a result, online platforms raise critical concerns regarding data integrity, security, transparency, and traceability as potential bidders have to trust the organizer for legitimacy of bids. Thus, adopting a decentralized approach using blockchain technology can transform the auction process, eliminating intermediaries, ensure transparency and reduce transaction costs. In this paper, we propose a general framework for decentralized auctions leveraging (i) Ethereum smart contracts to trace and track bids, (ii) decentralized storage systems to upload documents related to bidding and (iii) trusted timer oracles that act as gateway between smart contract and external data feeds. In the proposed solution, we develop detailed algorithms that define the working principles of the Smart contract for the auction process. We present detailed cost analysis of the solution to demonstrate economic feasibility, providing a secure, transparent and reliable approach to online auctions. © 2021