Auction Gauges Explained

High Level TLDR;

Auction Gauges, sometimes called “Gauge Auctions,” are the core mechanism SonicSphere uses to acquire yield-generating assets that support the protocol’s decentralized hedge fund.

If you’re familiar with traditional Solidly or its forks, you can think of these as similar to “Gauge Farms.” However, unlike those models, which rely on outside liquidity providers (often called “mercenary capital”) and earn fees from swaps, SonicSphere focuses on building Complete Protocol-Owned Liquidity (cPoL).

This means our Auction Gauges aren’t just a way to attract temporary liquidity. Instead, they are used to collect assets that are permanently owned by the protocol (on behalf of gSPHERE holders). These assets are then put to work generating yield, and gSPHERE holders who participate in governance benefit from the ongoing rewards produced by those yield-bearing assets.

Auction Gauges & Reward Auctions

Auction gauges are broken down into two respective categories.

Auction Gauges (Parent Auction)

Auction gauges are the parent gauge to any interest bearing asset that the SonicSphere fund may wish to acquire, for the process of farming its interest bearing properties. This may be a gauge for a specific LP token For Example: Shadow/wS LP, Anon/USDC.e LP or even single yield bearing assets like EUL or SHADOW (for single asset staking).

The auction gauges are what is voted on by gSPHERE holders to drive oSPHERE emissions to auctions run within Auction Gauge Proxies. From here, oSPHERE will be fed from the Auction Gauge contract (by proxy of our master chef contract), which will feed oSHARE incentives to Auction Gauge Proxies.

Reward Auctions (Child Auction)

Reward auctions are a subset of auctions based on the yield collected from any respective “Gauge Auction”. Think of it like this. A gauge auction is set to acquire yield bearing assets. Thanks to automation, each gauge auction contract is hard coded to automatically put those yield bearing assets to work. As more cPoL is acquired, the ability to extract yield from these assets is compounded in perpetuity. From here, reward auctions are triggered by harvesting the yield from each respective gauge auction & auctioning this yield off in a secondary “reward Auction” as a means of liquidating yield and distributing it back to ecosystem stakeholders (gSPHERE holders). Once a reward auction is completed, another will spawn in its place, allowing for income and yield produced by the funds cPoL assets to be liquidated in perpetuity, in an autonomous manner. The $SPHERE collected from these reward auctions is then distributed back to gSPHERE holders based on their size in respect to all other gSPHERE holdings.

Differentiation between Auction Gauges and Reward Auctions

In short, a Gauge Auction is the primary auction to acquire yield bearing assets (on behalf of the fund) that can be put to work (for the fund). Each Gauge Auction is pre coded to interact with its 3rd party counterpart, in order to farm the yield it is designed to extract. Reward auctions are simply a means of automating the process for liquidating the yield that said gauge auction has extracted, passing this value back to our ecosystem stakeholders

Feature	Auction Gauge	Reward Auction
Role/Purpose	The primary gauge for each specific yield-bearing asset class the fund wants to acquire.	Purpose built to automatically harvest and liquidate yield generated from “Parent” gauge auctions.
Functionality	Directs oSPHERE emissions to specific asset classes (e.g., LP tokens, single-asset staking).	Spawned when yield is extracted from parent gauge auctions & ready for liquidation & distribution
Emissions Control	Receives oSPHERE emissions via gSPHERE holder votes.	No emissions, rather the incentive here is an arbitrage on the value extracted from cPoL yield.
Auction Behavior	Runs the main auction for the yield asset. Once completed it resets.	Enables for automate liquidation of farmed yield & distribution of value back to gSPHERE holders
Why It Exists	Manages governance-driven asset acquisition, forming the strategic focus of cPoL accumulation.	Automation, decentralization & a simplified way to manage the fund autonomously.
Example	The Auction Gauge for swpX/ws LP is voted on and receives emissions.	SwapX LP earns SwpX yield & auctions it off in return for SPHERE. SPHERE earned from this auction is distributed back to gSPHERE holders.