Assignment

Once a clearing rate is determined, bids and offers can be assigned. All bids higher than the clearing rate and all offers lower than the clearing rate are eligible for assignment. All others are said to be "left on the table."

The assignment process prioritizes lowest cost suppliers on the lending side and borrowers most willing to pay and continues until all possible matches at the clearing rate are exhausted. This ensures that resources are allocated to the most efficient suppliers and those with the best use of proceeds. Where there is excess supply or demand at the clearing price on the margin, those marginal lenders (borrowers) are allocated in proportion to their share of all offers (bids) at the marginal price. This process is known as pro-rata on the margin allocation and follows standard convention common in traditional finance (see e.g. U.S. Treasury auctions).

The logic behind the assignment process can be found in the internal functions: _assignBids and _assignOffers within the TermAuction.solcontract.

Submitting a bid greater than or an offer below the clearing rate does not guarantee assignment. Bids can be invalidated if the collateral posted against their bid is no longer sufficient to satisfy the maintenance margin at the time of auction clearing. Moreover, it is possible that the assignment methodology results in a situation where allocations may be exhausted before marginal bidders/offerors are assigned.