Let's say bitcoin.p2p is being auctioned, and the current price is 10 DNS. For the sake of argument, let's assume that the minimum bid increment is 10%, so the lowest possible bid in the auction is 11 DNS. So I come along, and I have no interest in owning bitcoin.p2p, but I want to get a piece of the auction pie, so I enter a bid. To maximize the amount that I earn from whoever outbids me, I enter the minimum bid, 11. Then someone comes along and outbids me (the next minimum bid is 12.1), I take my 5% earnings, and go home happy. But what if a lot of people do this?
My guess is that minimum bids will be pretty common near the end of an auction, as lots of people enter the minimum bid to maximize their payoff. Which one of these people actually gets their bid entered in the auction? Will bid timestamps be accurate enough to ensure fairness?