In a typical auction, the individual who places the highest bid wins and receives the lot after paying the bid amount.
Contrary to the traditional format, Maecenas is offering digital shares of "14 Small Electric Chairs," meaning successful bidders will not receive any piece of the physical artwork, nor will they own the canvas in its entirety. The owner, Eleesa Dadiani, will retain 51 percent of the shares, while the remaining 49 percent will be distributed among the successful bidders along with digital certificates of ownership.
Additionally, Maecenas is following the Dutch auction process, which means the share price will not be determined until the end of the auction – in this case, six weeks or until Maecenas' funding target is reached. The reserve price is to be set at $4 million.
Through this method, bidders can submit bids equal to what they believe the artwork is worth rather than increasing their bids as the auction progresses. When the auction closes, "winning" bidders are selected from the highest bid down until all shares are allocated.
After the auction closes, an EDCC (aka smart contract) on the Ethereum blockchain will aggregate all the bids and set a final price, which will be the lowest amount that allows all shares to be sold. Successful bidders will each receive a share of the silkscreen. Because successful bidders only pay the final price, any amount exceeding that price will be returned to bidders' wallets. Unsuccessful bidders will receive full refunds.
But how does somebody join the auction? Interested parties must register with the Maecenas platform as beta testers. Per Maecenas, "All buyers will be subject to full 'know your customer' (KYC) and anti-money laundering (AML) checks that will assure that the purchases are compliant with financial regulations."
After account approval, users can view the silkscreen online and access the full data record of the auction in progress. Bids must be placed using bitcoin, Ether, or ART (Maecenas' native cryptocurrency), so individuals will need to deposit crypto funds into their Maecenas wallets.
Companies have been experimenting with fractional ownership via blockchain technology for some time, especially as it relates to the real estate market. However, "experiment" is the operative term; Maecenas' crypto auction is still considered a beta test. What remains to be seen is the long-term viability of putting the concept into practice.