If you are familiar with the world of art, this type of auction might ring a bell. The auctioneer commences the auction by announcing a recommended opening bid, a starting price, or a reserve for the item. Afterwards, the auctioneer accepts bids from those interested in buying the item that progressively gets higher. When the predetermined amount of time comes to an end, the person with the highest bid will be able to purchase the item.
As an example, let's assume a creator is carrying out an English auction for a 1 of 1 NFT on Burnt Finance. The process would generally proceed as follows
The auction starts with the seller establishing a reserve and starting price. The reserve price is disclosed upon auction creation, but the seller can choose to accept a certain bid by submitting an on-chain transaction before the reserve price is met.
Potential buyers place a bid on the item and the contract preserves that amount until another bidder bids on it. A buyer that is outbid will get their tokens back.
Any new bid that is placed during the last 10 minutes of the auction will add an additional 10 minutes to the auction time
When the auction concludes, the item will be handed over to the winner if the reserve price is hit. The seller is automatically provided with the purchase amount minus any marketplace or royalty fee. However, should the reserve fail to be hit by the end of the auction period and the seller chose not to accept any bids, the respective parties will receive back their bid amount and item