The Applicant Auction uses a "Simultaneous Ascending Clock Auction" format. This means that multiple strings are auctioned together, and prices start low and increase over time. As the prices increase, one bidder after another is no longer willing to pay the price. The last remaining bidder for a string wins it - for the price the second highest bidder was willing to pay.
The prices increase in rounds, and in each round you see the price for each domain being auctioned, and the number of bidders willing to pay this price. This gives you additional information about the market, which you can use to inform your bidding strategy on your TLD.
When the auction for a particular string has concluded, the winner's payment is divided in equal shares among the other applicants as compensation for withdrawing.
Relative to the ICANN Last Resort Auction, the Applicant Auction has many benefits.
The applicant auction:
- maximizes the value of the domains by putting them to their best use;
- rapidly resolves contention leading to faster gTLD assignment;
- allows the applicants to retain the benefits of resolution;
- has been shown in theory and in experiments to result in lower prices for buyers and
- compensates sellers—the applicants with lower bids—with a share of the buyer’s payment.