Purpose: Figure out the simplest way to handle the issuance of impact certs for the upcoming round of ACX grants

Solution / TLDR: Sealed-bid auction (USD) + derivative markets (M$)

Proposed mechanism

• For each of the pre-approved ACX grants, users can placed a sealed bid on impact.
  • Suppose 10k shares are issued for each grant.
  • Users then submit a bid of the form (1,500 shares; $20 / share) to Manifold
  • Bids are sealed, ie not publicly visible
  • The auction clearing price is the maximum price per share that results in all 10k shares being sold.
• Auction venue (USD)
  • Easiest / no code solutions: Email OR Google form
    • Users submit their bids to [email protected] along with a signed legal document saying they will pay up if they win
  • More sophisticated: Manifold webpage
    • We build a custom landing page showing all the different grants
    • Users can place bids directly from the site
    • Optionally allow users to link their bank accounts to pay if they win
• Trading venue (M$)
  • We set up a series of markets on Manifold denominated in M$ to track the total market cap of each grant (# shares * resulting auction clearing price)
    • No code solution: One of our pre-exisiting market types (numeric, FR with buckets, binary with threshold amounts, etc.)
    • More ambitious version: Futures markets

Why an auction?

• Sealed bid auctions are a time-tested method of price discovery for newly listed / created assets
  • Real world example: NYSE opening auction
• Bookkeeping is easy
• Auctions don’t require outside capital from Manifold or someone else to work
  • Unlike operating a trading venue, which would require someone to subsidize liquidity

Why not an impact cert trading platform?

• It’s a massive amount of eng effort to build a new market type
• Non-dischargeable technical debt
  • If we promise users they can trade real-money impact certs, we will never be able to remove the feature
  • Huge ongoing cost in eng, UX resources forever
  • Limits our flexibility going forward
    • Might want to list impact certs on someone else’s trading platform, or split Manifund into a new legal entity, etc.
• Legal risk
  • If you build a trading platform for impact certs, good luck convincing the SEC you don’t have a security on your hands
  • Opens the door to lawsuits, regulatory actions
• Operational risk
  • It’s one thing to make a mistake in paying out users in M$, it’s quite another if millions of dollars are on the line
  • Lawsuits, lost sleep, etc.