Making money from Dutch Auctions

For an "Explain it like I'm 5" piece on the Dutch Auctions of Float Protocol - see here.
Keyword: arbitrage
Let’s walk through all the cases of how to make money from the auctions. There are four cases of the auction. Expansions: “Up” and “Re-stock”. Contractions: “Confidence” and “Down”. Which case we are in is determined by whether the Basket Factor is above 100% or not and if the market price of FLOAT is above the target price or not.
 
FLOAT Market Price > Target Price
FLOAT Market Price < Target Price
Basket Factor > 100%
Up Expansion: Protocol sells  newly minted FLOAT in exchange for WETH and BANK.
Confidence Contraction: Protocol purchases FLOAT with WETH from the Basket.
Basket Factor < 100%
Re-stock Expansion: Protocol sells newly minted FLOAT in exchange for WETH.
Down Contraction: Protocol purchases FLOAT with WETH from the Basket and newly minted BANK.
Up Expansion
In this case the Basket Factor is above 100% and the market price of FLOAT is above the target price of FLOAT. Thus the protocol sells FLOAT in exchange for WETH and BANK. How to make money is as follows:
1.Purchase BANK off the market
2.Wrap your ETH into WETH if it isn’t wrapped already
3.Buy FLOAT from the Protocol at a discount to market price. You give the Protocol a split of WETH and BANK
4.Sell your discounted FLOAT at market price value
5.Pocket the difference in FLOAT price between what you got from the Protocol and what you sold for on the market as profit.
Re-Stock Expansion
In this case the Basket Factor is below 100% and the market price of FLOAT is above the target price of FLOAT. Thus the protocol sells FLOAT in exchange for just WETH which goes to re-stock the Basket. How to make money is as follows:
1.Wrap your ETH into WETH if it isn’t wrapped already
2.Buy FLOAT from the Protocol at a discount to market price during the Dutch Auction. You give the Protocol WETH you get FLOAT in return
3.Sell your discounted FLOAT at market price value
4.Pocket the difference in FLOAT price between what you got from the Protocol and what you sold for on the market as profit.
Confidence Contraction
In this case the Basket Factor is above 100% and the market price of FLOAT is below the target price of FLOAT. Thus the Protocol purchases FLOAT with WETH from the Basket at a premium to the market. How to make money is as follows:
1.Purchase FLOAT on the market
2.Sell FLOAT to the Protocol at a price higher than the market price during the Dutch Auction. You give the Protocol FLOAT, you get ‘discounted’ WETH in return.
3.The difference in value between the initial purchase of FLOAT and WETH received is your profit.
Down Contraction
In this case the Basket Factor is below 100% and the market price of FLOAT is below the target price of FLOAT. Thus the Protocol purchases FLOAT with WETH from the Basket and BANK at a premium to the market. How to make money is as follows:
1.Purchase FLOAT on the market
2.Sell FLOAT to the Protocol at a price higher than the market price during the Dutch Auction. You give the Protocol FLOAT, you get WETH and BANK
3.The difference in value between the initial purchase of FLOAT and BANK + WETH received is your profit.
N.B.
You will need to approve the Float Protocol Auction House contract to interact with your WETH, BANK and FLOAT to participate the Dutch Auctions.

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