You're missing the Vickrey auction part. It would be hard for the squatters to outbid you, as they wouldn't even know your bid in the first place. You could bid

You're missing the Vickrey auction part. It would be hard for the squatters to outbid you, as they wouldn't even know your bid in the first place. You could bid $100, but you'd only pay the second price (which could as well be $0). The squatters would either have to do either $100 per domain.