At the beginning of the auction the effective cap starts out high and the contributions low. As the auction progresses the contributions rise, while the current cap decreases according to predetermined formula. Once the contributions reach the cap, the 5 million DOT tokens will be allocated to contributors in proportion to their contribution.
* "contributed so far" includes the bonuses
For every period where 2 blocks are confirmed without new contributors, the early participation bonus will drop by 1 percentage point. After the 14th occurrence of this, or after 24 hours (whichever comes first) the early contribution bonus will end.
Unlike normal second-price Dutch auctions, you don't bid on a number of DOT tokens given a current provisional price (which will never increase, only decrease), but rather you bid on an amount to spend, and thus will receive more DOT tokens as the auction continues and the price lowers. Everyone who participates receives the same buy-in price, which is the price that the auction ends on.
more -
https://t.me/polkadot_ico or in twitter
