Order Flow Auction
In an order flow auction, market makers bid to win order flow contracts, which give the purchaser the right to fill incoming order flow of a specific grade.

How are DFlow auctions structured

Order flow contracts are sold in parallel, sequential auctions. Order flow is tranched by DFlow into specific grades to be sent to different order flow contracts. Each contract is identified by a unique ID and epoch number.
Contracts are designed to be mutually exclusive so many different contracts can be auctioned at the same time. However, for a single contract of a specific grade, that contract will be sold repeatedly over time in a sequential manner.

An auction process

Market makers can bid on and win multiple contracts simultaneously. Market makers can also bid on the same contract at different times based on its epoch number.
How contracts roll over
Consider an auction for an order flow contract with a batch size of $50,000. If Alice has won the order flow contract at Epoch 1, then she will begin receiving order flow as soon as Epoch 2 begins. Furthermore, Epoch 2 will last exactly the duration of time it takes for Alice to receive orders with a total notional size of $50,000. Note that the duration of the epoch is purely a function of how quickly new orders are received by the system, and not how quickly orders are filled by market makers.
Market maker bidding example
Market makers compete to purchase order flow contracts by bidding in auctions. When bidding on an order flow contract, a market maker specifies the contract's ID and epoch. Each market maker can submit multiple bids, and the highest bidder wins. The auction ends and a winner is announced when the previous auction winner receives order flow with a total notional size meeting the contract's specified batch size.
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How are DFlow auctions structured
An auction process