Resolving the continuous-market versus free-riding trade-off

Determine whether there exists an alternative to the market liquidity constraint in the basic auction that simultaneously preserves continuous token-market trading and avoids precluding socially valuable projects due to free riding; if such a design exists, construct and analyze its properties and feasibility.

Background

The mechanism imposes a market liquidity constraint to keep a sufficient float of tradable tokens, but this constraint can block socially valuable projects because it limits how much surplus the control party can capture to cover costs.

The authors consider alternative approaches (e.g., a flush sale plus token auction) but emphasize uncertainty about whether any alternative can resolve the fundamental trade-off between continuous trading and avoiding free-rider-induced project blockage.