There are two (2) types of Auctions in Setheum and there are two (2) scenarios that trigger these auctions. These auctions are all classified under the "Serp Auctions".
The Serp Auctions are inspired by the MakerDAO auction protocol. (Except the interest in the overall MakerDAO system of course).
The SERP mints DNAR to buy back SETT with the SerpAuction when SETT goes bearish. The DNAR staking rewards are increased in proportion to the burnt DNAR. This increases the value of DNAR and SETT consecutively
The SERP mints excess SETT inflation to the SettPayReserve as discounts and cashback to SettPay users. some percentage of the newly minted SETT is used to buy back DNAR with the "Serp Auctions" when SETT goes bullish.
This auction is triggered whenever the SERP needs to expand the supply of a SettCurrency.
The Serp auctions 15% of every SerpUp (Expansion in supply) of freshly minted SettCurrencies i.e; SETT for DNAR, jUSD for NEOM in order to support the DNAR as the SERP expands the supply of the currency/settcurrency in needed. The DNAR bought will be burnt.
The Expansion Auctions follow what is referred to as "English Auction". This means that you bid on fixed lots of 10,000 SETT, as determined by the "Monetary Council" governance, with increasing amounts of DNAR. For example, if the current bid on a 10,000 SETT lot is 20 DNAR, or a price of [0.002 DNAR/SETT], your next bid would need to be more than 20 DNAR, The mechanics of the auction also requires you to bid at least 2% more than the previous bid, so in this example, the next possible bid would be a minimum of 20.4 DNAR, or [0.00204 DNAR / SETT or 490.20 SETT/DNAR].
This auction is triggered whenever the SERP needs to contract the supply of a SettCurrency.
The SERP auctions freshly minted DNAR coins for SETT or any SettCurrency needed to contract its supply, in order to contract excess currency supply in the system.
The Auctions follow what is known as a "Reverse Auction". This means that you bid a fixed amount of SETT, in this case 50,000 SETT for decreasing amounts of DNAR. For example, if the amount bid is 250 DNAR, or a price of 200 SETT/DNAR, your next bid would need to be less than 250 DNAR. The mechanics of the auction also forces you to bid at least 3% less than the previous bid, so in this example, the next possible bid would be a maximum of 242.7 DNAR, or 206 SETT/DNAR.