Author: Zhixiong Pan

Let's talk about the new protocol CCA jointly released by Uniswap and Aztec, which stands for "Continuous Clearing Auction." It's specifically designed for price discovery and liquidity initialization of new assets. After the auction process is complete, the project team can import the funds and tokens raised into Uniswap v4, connecting them to secondary market trading.

The core objective of this protocol is to address the question of "how to price new assets." Historically, there have been many approaches: team airdrops (essentially free giveaways), Dutch auctions, fixed-price sales, as well as LBP, Bonding Curve, etc., all of which essentially involve "using some mechanism to sell a portion of tokens to the earliest participants."

However, Uniswap believes that these existing mechanisms each have their own pitfalls: some have very arbitrary pricing, some are extremely time-dependent, and some cannot provide sustained liquidity. Therefore, they hope that CCA can simultaneously address two issues: relatively fair price discovery and smooth, sustainable liquidity initiation.

Essentially, CCA is a protocol independent of Uniswap v4, serving as a complete issuance and pricing framework. However, it can also connect with the AMM kernel through Uniswap v4's hooks mechanism, especially after the CCA auction is completed, automatically injecting liquidity into Uniswap v4 smart contracts.

So what does this have to do with Aztec? Aztec's involvement in this matter is actually quite deep: they not only participated in the design of the CCA mechanism, but also became the first project to use CCA for token auctions. Furthermore, the CCA protocol itself can also incorporate KYC/compliance capabilities. Aztec used an identity verification function called ZKPassport in this auction. This is a project within the Aztec ecosystem, developed using their Noir language, and completes compliance checks through zero-knowledge proofs without exposing user privacy details.

Returning to CCA, it's not a fixed set of rules or a "single solution," but rather a configurable auction framework. It can be roughly broken down into the following steps:

1. Configuration phase: The auction initiator first sets the rules on the chain, such as the start and end times, the total number of "rounds" or time periods in the auction, the proportion of tokens released in each time period, the minimum price (floor price), whether whitelisting/identity verification is required, and how to import liquidity into Uniswap v4 after the auction ends, etc.
2. Bidding Phase: During the auction, participants can place bids at any time. Each bid includes two parameters: the amount of money invested and the maximum acceptable price per unit. Bids can be increased or adjusted afterward, and each order is recorded independently.
3. Spreading Phase: The system will automatically spread a bid across the remaining "release periods". Therefore, the earlier you place a bid, the longer the time you participate, and the more rounds you have the opportunity to participate in the liquidation.
4. Liquidation Phase: In each round, the system accumulates all valid bids for that round and then uses a unified set of rules to find a price that can sell all the tokens to be released in that round. This price becomes the final transaction price for that round. All bids with a max_price higher than or equal to this price will receive their corresponding share in that round according to the rules.
5. Closing: Once all rounds are completed, the auction ends. Participants can claim their earned tokens and any unsold funds; the protocol then injects the raised assets and the assets prepared by the project team into Uniswap v4 according to the pre-agreed strategy, officially launching the secondary market liquidity pool.

I think it's more like a time slice of the traditional "one-off auction": instead of clearing out all at once at a certain moment, it breaks down a large round into multiple smaller stages, allowing prices and the game to unfold over time. This is precisely why it's called a "Continuous Clearing Auction".