path: root/docs/examples/blind-auction.rst

.. index:: auction;blind, auction;open, blind auction, open auction

*************
Blind Auction
*************

In this section, we will show how easy it is to create a
completely blind auction contract on Ethereum.
We will start with an open auction where everyone
can see the bids that are made and then extend this
contract into a blind auction where it is not
possible to see the actual bid until the bidding
period ends.

.. _simple_auction:

Simple Open Auction
===================

The general idea of the following simple auction contract
is that everyone can send their bids during
a bidding period. The bids already include sending
money / ether in order to bind the bidders to their
bid. If the highest bid is raised, the previously
highest bidder gets her money back.
After the end of the bidding period, the
contract has to be called manually for the
beneficiary to receive their money - contracts cannot
activate themselves.

::

    pragma solidity >=0.4.22 <0.6.0;

    contract SimpleAuction {
        // Parameters of the auction. Times are either
        // absolute unix timestamps (seconds since 1970-01-01)
        // or time periods in seconds.
        address payable public beneficiary;
        uint public auctionEndTime;

        // Current state of the auction.
        address public highestBidder;
        uint public highestBid;

        // Allowed withdrawals of previous bids
        mapping(address => uint) pendingReturns;

        // Set to true at the end, disallows any change.
        // By default initialized to `false`.
        bool ended;

        // Events that will be emitted on changes.
        event HighestBidIncreased(address bidder, uint amount);
        event AuctionEnded(address winner, uint amount);

        // The following is a so-called natspec comment,
        // recognizable by the three slashes.
        // It will be shown when the user is asked to
        // confirm a transaction.

        /// Create a simple auction with `_biddingTime`
        /// seconds bidding time on behalf of the
        /// beneficiary address `_beneficiary`.
        constructor(
            uint _biddingTime,
            address payable _beneficiary
        ) public {
            beneficiary = _beneficiary;
            auctionEndTime = now + _biddingTime;
        }

        /// Bid on the auction with the value sent
        /// together with this transaction.
        /// The value will only be refunded if the
        /// auction is not won.
        function bid() public payable {
            // No arguments are necessary, all
            // information is already part of
            // the transaction. The keyword payable
            // is required for the function to
            // be able to receive Ether.

            // Revert the call if the bidding
            // period is over.
            require(
                now <= auctionEndTime,
                "Auction already ended."
            );

            // If the bid is not higher, send the
            // money back.
            require(
                msg.value > highestBid,
                "There already is a higher bid."
            );

            if (highestBid != 0) {
                // Sending back the money by simply using
                // highestBidder.send(highestBid) is a security risk
                // because it could execute an untrusted contract.
                // It is always safer to let the recipients
                // withdraw their money themselves.
                pendingReturns[highestBidder] += highestBid;
            }
            highestBidder = msg.sender;
            highestBid = msg.value;
            emit HighestBidIncreased(msg.sender, msg.value);
        }

        /// Withdraw a bid that was overbid.
        function withdraw() public returns (bool) {
            uint amount = pendingReturns[msg.sender];
            if (amount > 0) {
                // It is important to set this to zero because the recipient
                // can call this function again as part of the receiving call
                // before `send` returns.
                pendingReturns[msg.sender] = 0;

                if (!msg.sender.send(amount)) {
                    // No need to call throw here, just reset the amount owing
                    pendingReturns[msg.sender] = amount;
                    return false;
                }
            }
            return true;
        }

        /// End the auction and send the highest bid
        /// to the beneficiary.
        function auctionEnd() public {
            // It is a good guideline to structure functions that interact
            // with other contracts (i.e. they call functions or send Ether)
            // into three phases:
            // 1. checking conditions
            // 2. performing actions (potentially changing conditions)
            // 3. interacting with other contracts
            // If these phases are mixed up, the other contract could call
            // back into the current contract and modify the state or cause
            // effects (ether payout) to be performed multiple times.
            // If functions called internally include interaction with external
            // contracts, they also have to be considered interaction with
            // external contracts.

            // 1. Conditions
            require(now >= auctionEndTime, "Auction not yet ended.");
            require(!ended, "auctionEnd has already been called.");

            // 2. Effects
            ended = true;
            emit AuctionEnded(highestBidder, highestBid);

            // 3. Interaction
            beneficiary.transfer(highestBid);
        }
    }

Blind Auction
=============

The previous open auction is extended to a blind auction
in the following. The advantage of a blind auction is
that there is no time pressure towards the end of
the bidding period. Creating a blind auction on a
transparent computing platform might sound like a
contradiction, but cryptography comes to the rescue.

During the **bidding period**, a bidder does not
actually send her bid, but only a hashed version of it.
Since it is currently considered practically impossible
to find two (sufficiently long) values whose hash
values are equal, the bidder commits to the bid by that.
After the end of the bidding period, the bidders have
to reveal their bids: They send their values
unencrypted and the contract checks that the hash value
is the same as the one provided during the bidding period.

Another challenge is how to make the auction
**binding and blind** at the same time: The only way to
prevent the bidder from just not sending the money
after they won the auction is to make her send it
together with the bid. Since value transfers cannot
be blinded in Ethereum, anyone can see the value.

The following contract solves this problem by
accepting any value that is larger than the highest
bid. Since this can of course only be checked during
the reveal phase, some bids might be **invalid**, and
this is on purpose (it even provides an explicit
flag to place invalid bids with high value transfers):
Bidders can confuse competition by placing several
high or low invalid bids.


::

    pragma solidity >0.4.23 <0.6.0;

    contract BlindAuction {
        struct Bid {
            bytes32 blindedBid;
            uint deposit;
        }

        address payable public beneficiary;
        uint public biddingEnd;
        uint public revealEnd;
        bool public ended;

        mapping(address => Bid[]) public bids;

        address public highestBidder;
        uint public highestBid;

        // Allowed withdrawals of previous bids
        mapping(address => uint) pendingReturns;

        event AuctionEnded(address winner, uint highestBid);

        /// Modifiers are a convenient way to validate inputs to
        /// functions. `onlyBefore` is applied to `bid` below:
        /// The new function body is the modifier's body where
        /// `_` is replaced by the old function body.
        modifier onlyBefore(uint _time) { require(now < _time); _; }
        modifier onlyAfter(uint _time) { require(now > _time); _; }

        constructor(
            uint _biddingTime,
            uint _revealTime,
            address payable _beneficiary
        ) public {
            beneficiary = _beneficiary;
            biddingEnd = now + _biddingTime;
            revealEnd = biddingEnd + _revealTime;
        }

        /// Place a blinded bid with `_blindedBid` =
        /// keccak256(abi.encodePacked(value, fake, secret)).
        /// The sent ether is only refunded if the bid is correctly
        /// revealed in the revealing phase. The bid is valid if the
        /// ether sent together with the bid is at least "value" and
        /// "fake" is not true. Setting "fake" to true and sending
        /// not the exact amount are ways to hide the real bid but
        /// still make the required deposit. The same address can
        /// place multiple bids.
        function bid(bytes32 _blindedBid)
            public
            payable
            onlyBefore(biddingEnd)
        {
            bids[msg.sender].push(Bid({
                blindedBid: _blindedBid,
                deposit: msg.value
            }));
        }

        /// Reveal your blinded bids. You will get a refund for all
        /// correctly blinded invalid bids and for all bids except for
        /// the totally highest.
        function reveal(
            uint[] memory _values,
            bool[] memory _fake,
            bytes32[] memory _secret
        )
            public
            onlyAfter(biddingEnd)
            onlyBefore(revealEnd)
        {
            uint length = bids[msg.sender].length;
            require(_values.length == length);
            require(_fake.length == length);
            require(_secret.length == length);

            uint refund;
            for (uint i = 0; i < length; i++) {
                Bid storage bidToCheck = bids[msg.sender][i];
                (uint value, bool fake, bytes32 secret) =
                        (_values[i], _fake[i], _secret[i]);
                if (bidToCheck.blindedBid != keccak256(abi.encodePacked(value, fake, secret))) {
                    // Bid was not actually revealed.
                    // Do not refund deposit.
                    continue;
                }
                refund += bidToCheck.deposit;
                if (!fake && bidToCheck.deposit >= value) {
                    if (placeBid(msg.sender, value))
                        refund -= value;
                }
                // Make it impossible for the sender to re-claim
                // the same deposit.
                bidToCheck.blindedBid = bytes32(0);
            }
            msg.sender.transfer(refund);
        }

        // This is an "internal" function which means that it
        // can only be called from the contract itself (or from
        // derived contracts).
        function placeBid(address bidder, uint value) internal
                returns (bool success)
        {
            if (value <= highestBid) {
                return false;
            }
            if (highestBidder != address(0)) {
                // Refund the previously highest bidder.
                pendingReturns[highestBidder] += highestBid;
            }
            highestBid = value;
            highestBidder = bidder;
            return true;
        }

        /// Withdraw a bid that was overbid.
        function withdraw() public {
            uint amount = pendingReturns[msg.sender];
            if (amount > 0) {
                // It is important to set this to zero because the recipient
                // can call this function again as part of the receiving call
                // before `transfer` returns (see the remark above about
                // conditions -> effects -> interaction).
                pendingReturns[msg.sender] = 0;

                msg.sender.transfer(amount);
            }
        }

        /// End the auction and send the highest bid
        /// to the beneficiary.
        function auctionEnd()
            public
            onlyAfter(revealEnd)
        {
            require(!ended);
            emit AuctionEnded(highestBidder, highestBid);
            ended = true;
            beneficiary.transfer(highestBid);
        }
    }