What it is
Weighted-average reserve price voting is a way for a group of people who jointly own a fractionalized asset (typically an NFT held in a vault) to set the minimum price at which it can be sold, without needing unanimous agreement or a single decision-maker. Each holder submits the price they personally think is fair, and the contract computes a single reserve price as a weighted average, where the weight is each voter's share of the total fraction supply.
How it works
- Each fraction-token holder can submit (and update at any time) a proposed reserve price — the minimum sale price they'd be willing to accept for the underlying asset.
- The smart contract records each holder's proposed price alongside their current token balance.
- The effective reserve price is computed as a token-weighted average: a holder with 10% of the supply contributes 10% of the weight to the final number, regardless of how extreme their individual price vote is.
- This weighted-average price updates dynamically as fractions change hands — buying or selling fraction tokens on the open market automatically shifts voting weight, and the new holder's price vote (or lack of one, defaulting to some rule) feeds into the average.
- The live reserve price is exposed publicly, typically as the floor for a parallel buyout-auction mechanism: any offer at or above the current weighted-average reserve price can trigger a forced sale of the underlying asset.
- Because the price is continuously recalculated rather than fixed at vault creation, it reflects the current ownership distribution and current market sentiment, not a stale snapshot from when the vault was formed.
Why designers use it
- Avoids the need for a formal, slow governance vote (proposal, quorum, voting period) just to agree on a price — it's always "live."
- Weights influence by economic stake, so it can't be swayed by a large number of tiny holders acting in a coordinated but low-stake way (a basic Sybil defense).
- Lets the reserve price adapt continuously as new information arrives or as ownership changes, rather than requiring a fresh vote each time.
- Gives every fraction holder a voice proportional to their exposure, which feels fairer than a single admin or the original depositor unilaterally setting the price.
Failure modes
- A holder who accumulates a large fraction share can pull the weighted average sharply toward their preferred price, effectively overriding the collective view of many smaller holders.
- If most holders never bother to vote (rational apathy, since it costs gas or attention with no guaranteed near-term payoff), the "average" ends up reflecting only the few who did — often the most extreme or most engaged holders, not a representative sample.
- Flash-loan or short-term-borrowing attacks can, in poorly designed vaults, let an attacker temporarily inflate their voting weight, submit an extreme price, and then return the borrowed tokens before anyone reacts.
- A weighted average of prices can produce a number no actual participant would have chosen — everyone's "true" fair value might cluster in two groups (e.g., low and high) and the average lands in a no man's land neither group wanted.
- If fraction tokens trade at a premium or discount to fundamental value, using price votes denominated in those tokens can bake in that mispricing.
What to check before using it
- Check whether the contract has any safeguards against instantaneous, borrowed-token voting weight (e.g., snapshotting balances or requiring a holding period).
- Look at what fraction of token supply typically participates in price-setting; a low turnout means the reserve price may not represent the true holder base.
- Understand what happens by default for holders who never submit a price vote — are they excluded from the average, or given a default weight that could be exploited?
- Verify how frequently the price can be updated and whether there's any rate-limiting to prevent rapid manipulation around a pending buyout offer.
- Model concentration risk: what percentage of fraction supply would a single actor need to meaningfully move the reserve price on their own?