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From 8 new NFT AMMs, talk about how they can provide liquidity for NFT
Summarized by AI
The emergence of DeFi has started a revolution in the democratization of digital finance . Among them, the free creation of liquidity pools through AMM has greatly increased the liquidity of ERC-20 Tokens, and unlocked the discovery of value for some long-tail Tokens, so today you can see a variety of transactions, loans and leverage on the chain and other activities.
On the other hand, with the popularity of NFT in the past two years, NFT-based financialization Infrastructure also came into being. In particular, the emergence of Sudoswap has pushed the development of NFT Fi to a new milestone. Unlike off-chain order books, through SudoAMM anyone can add or remove liquidity on-chain, enabling truly decentralized NFT trading for liquidity pools holding ERC-20/NFT pairs.
However, Sudoswap’s airdrop rules have caused considerable controversy in the community. Many users expressed disappointment with its airdrop, thinking that Sudoswap did not show respect for the community and the importance of liquidity providers, so there is an urgent need for an NFT AMM that can replace Sudoswap, and is even better than the traditional NFT trading market ( Such as OpenSea, X2Y2) to provide liquidity.
Next, this article will introduce some new NFT AMMs that have appeared on the market , and specific methods of providing liquidity suitable for different types of NFT, for readers’ reference.
TL;DR
1) Treat an NFT collection mainly as the floor price and its nearby NFTs (thus approximately regarded as replaceable) and rare NFTs;
2) The ways to provide liquidity for floor NFT mainly include: NFT AMM and some NFT liquidity agreements;
3) The ways to provide liquidity for rare NFT mainly include: auctions and NFT fragments
4) Whether it is a floor or a rare NFT in a collection, liquidity can be increased in the form of loans and leases.
NFT AMM
NFT AMMs are a decentralized alternative to off-chain order book centralized NFT marketplaces like OpenSea, X2Y2 or Magic Eden, which primarily utilize liquidity pools for frictionless and low cost transactions.
Due to the low accessibility of NFTs, in the current centralized market, sometimes even blue-chip NFTs also don't have much liquidity. Through NFT AMM, anyone can add liquidity to it on the chain and earn certain transaction fees.
SudoAMM is an NFT AMM protocol created by Sudoswap, which consists of many individual NFT liquidity Each liquidity pool is managed by an LP. LP can set the Pricing function curve, Initial fee, Incremental threshold and b>transaction fee ratio to control.
Different from the traditional AMM's constant product algorithm curve, SudoAMM uses a joint pricing curve (allowing to choose any curve) to build a flow To facilitate NFT transactions, it mainly includes linear curve (Linear Curve) and exponential curve (Exponential Curve). Recently, Sudoswap has added another pricing curve called "Concentrated XYK Curve", which will allow users to control the depth and slippage of their liquidity pool by setting concentration parameters. This controls the price range of the liquidity pool.
Granular
Granular aims to create a low gas , NFT AMM, which can better evaluate the value of NFT, won the third prize of the NFT Financialization Hackathon initiated by 1kx network and Macro DAO.
Granular believes that the NFT in the liquidity pool of the existing NFT AMM market (such as Sudoswap) is generally regarded as substitutable, They are basically the same price, usually around the floor price. But this brings some problems. Intuitively, the value of NFT in a collection is not the same, which will lead to the serious underestimation of the value of rare NFT.
In Granular, it is set that each NFT collection has a "main pool". Whether you want to trade or do LP, you need to go to the same main pool, and the listed NFTs will have different prices in the main pool.
But in fact, each "main pool" is composed of multiple "sub Pool" and divided according to the "desirability score" of the NFT collection, lower-scoring sub-pools mainly contain underlying NFT assets, and higher-scoring sub-pools contain high-quality assets.
And, each subpool has its own bonding curve, the number of subpools and each subpool The number of NFTs in the pool varies depending on the NFT collection, and the higher the liquidity of the NFT collection, the greater the number of sub-pools.
SeaCowsSeaCows
SeaCows is a AI-driven hybrid NFT AMM protocol , supports any Web3 project to build its own decentralized NFT AMM market to provide instant NFT liquidity and increase transactions. Compared with Sudoswap, SeaCows has added an AI-driven price oracle to comprehensively evaluate the value of NFT.
SeaCows believes that NFT is different from ERC-20 Token, and the commonly used bonding curve pricing strategy does not take into account their uniqueness< /b> and Irreplaceable, so an AI-based price evaluation mechanism is needed to combine on-chain and off-chain data of a specific liquidity pool to provide real-time information for NFT Fair offer.
< /p>
In terms of the specific working mechanism, SeaCows' AI price oracle will collect and summarize the metadata and related transaction history< of an NFT collection< /b>, and then clean and process the captured data for training and evaluation of NFT value algorithms. Next, this collection of NFTs is divided into 5 groups based on their rarity and utility.
When creating a liquidity pool on the chain, set different pricing parameters for each group (ie initial price, pricing function, incremental threshold, and handling fee), and can be adjusted by LPs. When set, pools with different tiers will be created.
In addition, the SeaCows core development team is composed of NFT degens and game players, so SeaCows is working with GameFi The project collaborates to test its feasibility and practicality, helping the latter to test and integrate a peer-to-pool NFT AMM game marketplace to increase in-game transactions and strengthen the game economy. At the same time, players can also earn transaction fees by becoming liquidity providers.
At present, the Alpha test version of SeaCows has been launched, and the Beta version will be launched at the end of September.
PikoSwapPikoSwap
Pikoswap is an NFT AMM on the chain, users can trade NFT freely and flexibly, and also You can build your own NFT liquidity pool and earn transaction fees.
< p>Pikoswap also believes that the NFT in the liquidity pool is a collection of similar quality and price, applicable to a certain price range, but no special distinction is made. In order to realize the pricing of NFT in each pool, Pikoswap also adopts the bonding curve pricing strategy: Linear Curve and Exponential Curve.
In addition, Pikoswap has set 0 royalties, charging ;0.5% commission. Currently, the Pikoswap beta version will be launched soon, and the platform token (PIKO) will be launched later.
Based on the disclosed information, the official Twitter was only launched this month, and the Pikoswap AMM The mechanism design is highly similar to Sudoswap, and it can be regarded as an imitation project of the latter for the time being.
HerculeswapHerculeswap
Herculeswap is also an NFT market with AMM, allowing NFT creators to trade in Herculeswap Publish their NFT series and add a liquidity pool to it. At the same time, users can also establish their own NFT liquidity pool and earn transaction fees.
< /p>
However, Herculeswap believes that the existing problems in the NFT AMM market are the volatility of LPs and the lack of initial funding to the liquidity pool. Therefore, in order to protect investors and support real creators, NFT creators need to set a certain percentage of mint revenue locked in the liquidity pool to provide initial liquidity; if the project mint fails, mint fees will be returned to investors .
Currently, the official website of Herculeswap is not yet online, and the official Twitter was launched in August this year.
Goat Swap< /a>
Goat Swap is an NFT AMM on Solana, aggregated by transactions on the Solana chain Founded by the co-founder of Jupiter Aggregator.
Through GOAT Swap, users can create their own liquidity pools to buy, sell and trade NFT. The most common liquidity pool in GOAT Swap is the NFT< > SOL pool, and any user who holds the corresponding NFT in the liquidity pool can exchange it for SOL.
Currently, the Beta version of the Goat Swap main network has been launched, and the platform charges 1 % transaction fee. From the perspective of user experience, GOAT Swap is also an imitation project of Sudoswap. When users create a liquidity pool, they can set the price and transaction fee ratio of NFT by themselves. However, GOAT Swap did not disclose the specific NFT pricing strategy curve.
ElixirElixir a>
Elixir is another NFT AMM on Solana, which mainly provides buying, selling and trading collections NFT near the floor price of the product. Elixir aims to distribute market ownership to legitimate value creators, and the platform is co-governed and owned by creators, collectibles, and the community.
At the same time, Elixir provides for Nectar holders For functions such as lending, staking, and derivatives, Nectar will issue 777 tokens for free. However, the official Discord is currently closed, and the specific acquisition rules are still unknown.
Furthermore, creators on Elixir When releasing NFT series, it is also necessary to set a certain percentage of mint income to be locked in the liquidity pool to provide initial liquidity, and when users create a liquidity pool, they also need to Follow the relevant fee structure as determined by Elixir.
hadeswaphadeswap
hadeswap is also an NFT AMM on Solana, users can create their own liquidity pools to Buying, selling and trading NFT has been supported by the recent Solana popular NFT project ABC (abracadabra).
ArraySwap
ArraySwap is an NFT AMM on BSC, which has not yet been officially launched.
NFT Liquidity Agreement
In addition to NFT AMM, the floor price and nearby NFTs in the current NFT collection can also be deposited in the vault (Vault) or liquidity pool of some liquidity agreements and cast into interchangeable ERC-20 Token, and then add the Token to DEX to obtain liquidity indirectly.
At the same time, it is not limited to NFT near the floor, it can also be same price level< /b>'s NFT creates a liquidity pool. NFTs in a price tier can also be considered fungible as long as there is sufficient supply.
Home, but open the buyer pool to those who want to buy any "same group of NFT", providing a faster liquidity time than ordinary market sales, and NFT-LP protocols such as NFTX and NFT20 are exactly that A market built on a liquidity pool similar to the "NFT asset group".
NFTXNFTX
NFTX is a market and liquidity protocol designed to realize NFT transactions, NFT collection Investors can deposit the entire NFT in a vault of NFTX to mint interchangeable ERC-20 vTokens.
The vToken represents the value deposited in NFT, each NFT in the vault comes from NFT of the same collection. At any time, the NFT collector can use these vTokens to purchase a random NFT asset from the vault, or redeem a specific NFT from the same vault for an additional fee.
One of the features supporting the NFTX model is that vTokens can establish ERC-20 corresponding flow pools on Uniswap and Sushiswap, such as CryptoPunks series ETH - PUNK LP, so users can obtain instant liquidity of NFT with the help of highly liquid vToken.
Retail investors who want to invest in CryptoPunks can also invest by purchasing PUNK. In addition, collectors can also stake their vTokens in the liquidity pool, and every time someone buys or sells an NFT, the staker can earn a fee income.
NFT20 (MUSE DAO)
NFT20 is a decentralized NFT transaction that allows individuals Trade, sell and swap NFTs. Similar to NFTX, NFT20 allows NFT holders to add their NFT (such as BAYC) to a liquidity pool, and in return, they will receive 100 ERC-20 tokens that are interchangeable in the specific liquidity pool.
These ERC-20 Tokens can be traded on DEXs such as Uniswap or deposited as liquidity, and other NFTs in the NFT collection can be purchased in the corresponding liquidity pool. In addition, some NFT20 liquidity pools Liquidity mining incentives are also provided, and users can obtain the local Token (MUSE) of NFT20.
It is worth mentioning that if the NFT holder thinks his NFT price is higher, he can choose to create a Dutch auction on the NFT20 asset page, so that he can get a higher ERC-20 Token price when selling NFT.< /p>
In summary, after trade-offs, NFTX and NFT20 have played a role in the design of the liquidity mechanism A certain demonstration effect. However, due to the uniqueness and diversification of NFT, it still brings challenges to finding liquidity.
< /p>
For some rare NFTs, they tend to occupy a higher value. Although the financialization protocol for floor NFTs can unlock more liquidity, we are looking for liquidity solutions for rare NFTs There is still a lot of untapped value.
Auction
< p>
Auction is a better way to provide liquidity for rare NFTs, and often brings great profits to creators (such as auctions of rare NFTs such as BAYC and CryptoPunk on Christie’s and Sotheby’s), and high-profile bidding wars have played no small role in bringing NFTs to the market.
However, as a means of price discovery,the capital utilization efficiency of auctions is very low or even lower than that of direct deal because it requires bidders to lock up capital, and capital lock-up among multiple bidders can often exceed the price at which the asset is ultimately sold.
< /p>
Additionally, auctions often require pre-negotiations with potential buyers or extensive marketing efforts to draw attention to the sale, which takes a long time b>.
NFT Fragmentation Protocol
< p>The fragmentation protocol of NFT is another way to help deepen the liquidity of rare NFT. The fragmentation protocol involves "split" NFT into multiple part, and then converted into an alternative Token to obtain liquidity in DEX.
This allows users to obtain fractional ownership of some highly sought-after and rare NFTs, whileWithout paying high costs, while increasing access to rare NFTs and building new communities.
UniclyUnicly
Unicly is a permissionless fragmentation protocol for combining, A collection of NFTs (which can be different series of NFTs) is locked in Unicly’s smart contract to create a Vault, and an ERC-20 uToken is minted, and then the uToken is added to Unicswap (a fork product of Uniswap V2) to complete pricing and obtain liquidity .
When uToken holders reach a certain ratio, they can vote to unlock the Vault. This ratio is set by the Vault creator at the beginning set up. After unlocking, the NFT in the Vault can be bid for by the highest bidder, and uToken holders can receive part of the ETH paid by the bidder.
In addition, Unicly issued a governance token (UNIC), the holder can lock the UNIC Earn xUNIC, and xUNIC holders earn 0.05% of the Unicly protocol. This part of the revenue comes from the 0.3% transaction fee charged to users for trading uTokens on Unicswap, and the remaining 0.25% fee goes to uTokens liquidity providers.
Fractional (Tessera )
Fractional is another decentralized NFT fragmentation protocol, users NFT can be locked in Fractional's Vault, and a certain number of ERC-20 Tokens can be minted. At the same time, the specific names, symbols and reserve prices of these Tokens are also set by the creators.
Then, creators need to distribute these Tokens, and end users can buy them directly on Uniswap. Token holders can vote to update the reserve price of the NFT auction, and start bidding to buy NFT after fully voting and negotiating the price. After the auction, holders can earn a profit by exchanging their tokens for ETH.
The difference between Fractional and liquidity protocols like NFTX and NFT20 is that once the NFT is deposited In Fractional's Vault, NFTs will be auctioned without any revenue generation mechanism, while NFTs deposited on NFTX and NFT20 will be locked in the revenue generation pool.
But in general, there are still ways to provide liquidity through NFT fragmentation protocols Certain limitations. It will make people more willing to trade parts of rare NFTs, which increases the difficulty of market making based on the customization characteristics of complete rare NFTs, while introducing complexity of ownership and governance.
In addition, fragmentation also reduces the composability of assets, making rare NFT Portions of are often of little use outside of the system.
Lending and Lease
Lending and leasing are important economic behaviors in the financial field, and for NFT, whether it is floor or rare, these two methods are It can further unlock liquidity and increase capital utilization efficiency.
NFT loan
The NFT lending platform allows users to borrow liquid assets by mortgaging their NFT to improve the capital utilization efficiency of NFT. In the NFT lending agreement, there are two main mechanisms that can promote NFT as collateralized lending: peer-to-peer lending and peer-to-pool lending.
1) Peer-to-peer lending
< p>
In peer-to-peer lending protocols such as NFTFi< /a>, TrustNFT, etc.), the borrower and lender agree on the terms of the loan (term, loan-to-value ratio, and APR) in a peer-to-peer fashion . Among other things, the matching process is manual, with parties needing to agree on terms and borrowers needing to approve loan offers, so the time to access liquidity can be slow.
However, loan terms can be customized to each user without relying on price oracles, but Expertise is required to perform a valuation.
2) Peer-to-pool lending
Different from peer-to-peer lending, peer-to-pool lending can provide instant liquidity. The NFT lending protocol (such as BendDAO, Drops, etc.) are responsible for the matching process, while Need to rely on price oracles to automate loan terms.
So for these protocols to work, the oracle infrastructure and stable floor prices become important, so most protocols only accept blue-chip assets as collateral.
NFT Leasing
The NFT leasing agreement allows users to rent out their NFT in exchange for a stable fee or future income, such as some goldsmithing guilds lending in-game NFT assets to new players in exchange for their Token obtained in the game in the future. This provides an additional source of liquidity for those users who do not want to give up their assets but want to earn income by idle NFT.
Therefore, NFT leasing is divided into General NFT Leasing Agreement ( Such as reNFT, Rentable , etc.) and for Leasing platforms in the vertical field, such as some game asset leasing platforms that come with GameFi, and some metaverse virtual land leasing platforms.
However, the NFT currently on the market lacks certain practicality, so rent Demand for mainstream NFT assets is generally low. Recently, the general-purpose NFT leasing agreement Rentable officially announced its closure, and the founder also said when summing up the lessons, "NFT is different from ERC-20, and a vertical NFT leasing customization solution should be established."
Summary
< /p>
Due to the emergence of NFT as an irreplaceable Token, it is naturally less liquid than ERC-20 Token. The lack of liquidity has brought about two problems: Insufficient price discovery and Low capital utilization, which further hinder the release of greater potential of NFT.
< p>Therefore, this article explores some ways to provide liquidity for NFT, Some NFT AMMs like Sudoswap are highlighted. However, the development and experimentation of NFT financialization has just begun, and the foundation of a reliable NFT valuation model has yet to be established, and as NFT expands to the wider economy and gains more applications, this will further improve the application of NFT. To more reasonably determine the value of the asset.
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PikoSwap
Pikoswap is an NFT AMM on the chain, users can trade NFT freely and flexibly, and also You can build your own NFT liquidity pool and earn transaction fees.
Pikoswap also believes that the NFT in the liquidity pool is a collection of similar quality and price, applicable to a certain price range, but no special distinction is made. In order to realize the pricing of NFT in each pool, Pikoswap also adopts the bonding curve pricing strategy: Linear Curve and Exponential Curve.
In addition, Pikoswap has set 0 royalties, charging ;0.5% commission. Currently, the Pikoswap beta version will be launched soon, and the platform token (PIKO) will be launched later.
Based on the disclosed information, the official Twitter was only launched this month, and the Pikoswap AMM The mechanism design is highly similar to Sudoswap, and it can be regarded as an imitation project of the latter for the time being.
HerculeswapHerculeswap
Herculeswap is also an NFT market with AMM, allowing NFT creators to trade in Herculeswap Publish their NFT series and add a liquidity pool to it. At the same time, users can also establish their own NFT liquidity pool and earn transaction fees.
< /p>
However, Herculeswap believes that the existing problems in the NFT AMM market are the volatility of LPs and the lack of initial funding to the liquidity pool. Therefore, in order to protect investors and support real creators, NFT creators need to set a certain percentage of mint revenue locked in the liquidity pool to provide initial liquidity; if the project mint fails, mint fees will be returned to investors .
Currently, the official website of Herculeswap is not yet online, and the official Twitter was launched in August this year.
Goat Swap< /a>
Goat Swap is an NFT AMM on Solana, aggregated by transactions on the Solana chain Founded by the co-founder of Jupiter Aggregator.
Through GOAT Swap, users can create their own liquidity pools to buy, sell and trade NFT. The most common liquidity pool in GOAT Swap is the NFT< > SOL pool, and any user who holds the corresponding NFT in the liquidity pool can exchange it for SOL.
Currently, the Beta version of the Goat Swap main network has been launched, and the platform charges 1 % transaction fee. From the perspective of user experience, GOAT Swap is also an imitation project of Sudoswap. When users create a liquidity pool, they can set the price and transaction fee ratio of NFT by themselves. However, GOAT Swap did not disclose the specific NFT pricing strategy curve.
ElixirElixir a>
Elixir is another NFT AMM on Solana, which mainly provides buying, selling and trading collections NFT near the floor price of the product. Elixir aims to distribute market ownership to legitimate value creators, and the platform is co-governed and owned by creators, collectibles, and the community.
At the same time, Elixir provides for Nectar holders For functions such as lending, staking, and derivatives, Nectar will issue 777 tokens for free. However, the official Discord is currently closed, and the specific acquisition rules are still unknown.
Furthermore, creators on Elixir When releasing NFT series, it is also necessary to set a certain percentage of mint income to be locked in the liquidity pool to provide initial liquidity, and when users create a liquidity pool, they also need to Follow the relevant fee structure as determined by Elixir.
hadeswaphadeswap
hadeswap is also an NFT AMM on Solana, users can create their own liquidity pools to Buying, selling and trading NFT has been supported by the recent Solana popular NFT project ABC (abracadabra).
ArraySwap
ArraySwap is an NFT AMM on BSC, which has not yet been officially launched.
NFT Liquidity Agreement
In addition to NFT AMM, the floor price and nearby NFTs in the current NFT collection can also be deposited in the vault (Vault) or liquidity pool of some liquidity agreements and cast into interchangeable ERC-20 Token, and then add the Token to DEX to obtain liquidity indirectly.
At the same time, it is not limited to NFT near the floor, it can also be same price level< /b>'s NFT creates a liquidity pool. NFTs in a price tier can also be considered fungible as long as there is sufficient supply.
Home, but open the buyer pool to those who want to buy any "same group of NFT", providing a faster liquidity time than ordinary market sales, and NFT-LP protocols such as NFTX and NFT20 are exactly that A market built on a liquidity pool similar to the "NFT asset group".
NFTXNFTX
NFTX is a market and liquidity protocol designed to realize NFT transactions, NFT collection Investors can deposit the entire NFT in a vault of NFTX to mint interchangeable ERC-20 vTokens.
The vToken represents the value deposited in NFT, each NFT in the vault comes from NFT of the same collection. At any time, the NFT collector can use these vTokens to purchase a random NFT asset from the vault, or redeem a specific NFT from the same vault for an additional fee.
One of the features supporting the NFTX model is that vTokens can establish ERC-20 corresponding flow pools on Uniswap and Sushiswap, such as CryptoPunks series ETH - PUNK LP, so users can obtain instant liquidity of NFT with the help of highly liquid vToken.
Retail investors who want to invest in CryptoPunks can also invest by purchasing PUNK. In addition, collectors can also stake their vTokens in the liquidity pool, and every time someone buys or sells an NFT, the staker can earn a fee income.
NFT20 (MUSE DAO)
NFT20 is a decentralized NFT transaction that allows individuals Trade, sell and swap NFTs. Similar to NFTX, NFT20 allows NFT holders to add their NFT (such as BAYC) to a liquidity pool, and in return, they will receive 100 ERC-20 tokens that are interchangeable in the specific liquidity pool.
These ERC-20 Tokens can be traded on DEXs such as Uniswap or deposited as liquidity, and other NFTs in the NFT collection can be purchased in the corresponding liquidity pool. In addition, some NFT20 liquidity pools Liquidity mining incentives are also provided, and users can obtain the local Token (MUSE) of NFT20.
It is worth mentioning that if the NFT holder thinks his NFT price is higher, he can choose to create a Dutch auction on the NFT20 asset page, so that he can get a higher ERC-20 Token price when selling NFT.< /p>
In summary, after trade-offs, NFTX and NFT20 have played a role in the design of the liquidity mechanism A certain demonstration effect. However, due to the uniqueness and diversification of NFT, it still brings challenges to finding liquidity.
< /p>
For some rare NFTs, they tend to occupy a higher value. Although the financialization protocol for floor NFTs can unlock more liquidity, we are looking for liquidity solutions for rare NFTs There is still a lot of untapped value.
Auction
< p>
Auction is a better way to provide liquidity for rare NFTs, and often brings great profits to creators (such as auctions of rare NFTs such as BAYC and CryptoPunk on Christie’s and Sotheby’s), and high-profile bidding wars have played no small role in bringing NFTs to the market.
However, as a means of price discovery,the capital utilization efficiency of auctions is very low or even lower than that of direct deal because it requires bidders to lock up capital, and capital lock-up among multiple bidders can often exceed the price at which the asset is ultimately sold.
< /p>
Additionally, auctions often require pre-negotiations with potential buyers or extensive marketing efforts to draw attention to the sale, which takes a long time b>.
NFT Fragmentation Protocol
< p>The fragmentation protocol of NFT is another way to help deepen the liquidity of rare NFT. The fragmentation protocol involves "split" NFT into multiple part, and then converted into an alternative Token to obtain liquidity in DEX.
This allows users to obtain fractional ownership of some highly sought-after and rare NFTs, whileWithout paying high costs, while increasing access to rare NFTs and building new communities.
UniclyUnicly
Unicly is a permissionless fragmentation protocol for combining, A collection of NFTs (which can be different series of NFTs) is locked in Unicly’s smart contract to create a Vault, and an ERC-20 uToken is minted, and then the uToken is added to Unicswap (a fork product of Uniswap V2) to complete pricing and obtain liquidity .
When uToken holders reach a certain ratio, they can vote to unlock the Vault. This ratio is set by the Vault creator at the beginning set up. After unlocking, the NFT in the Vault can be bid for by the highest bidder, and uToken holders can receive part of the ETH paid by the bidder.
In addition, Unicly issued a governance token (UNIC), the holder can lock the UNIC Earn xUNIC, and xUNIC holders earn 0.05% of the Unicly protocol. This part of the revenue comes from the 0.3% transaction fee charged to users for trading uTokens on Unicswap, and the remaining 0.25% fee goes to uTokens liquidity providers.
Fractional (Tessera )
Fractional is another decentralized NFT fragmentation protocol, users NFT can be locked in Fractional's Vault, and a certain number of ERC-20 Tokens can be minted. At the same time, the specific names, symbols and reserve prices of these Tokens are also set by the creators.
Then, creators need to distribute these Tokens, and end users can buy them directly on Uniswap. Token holders can vote to update the reserve price of the NFT auction, and start bidding to buy NFT after fully voting and negotiating the price. After the auction, holders can earn a profit by exchanging their tokens for ETH.
The difference between Fractional and liquidity protocols like NFTX and NFT20 is that once the NFT is deposited In Fractional's Vault, NFTs will be auctioned without any revenue generation mechanism, while NFTs deposited on NFTX and NFT20 will be locked in the revenue generation pool.
But in general, there are still ways to provide liquidity through NFT fragmentation protocols Certain limitations. It will make people more willing to trade parts of rare NFTs, which increases the difficulty of market making based on the customization characteristics of complete rare NFTs, while introducing complexity of ownership and governance.
In addition, fragmentation also reduces the composability of assets, making rare NFT Portions of are often of little use outside of the system.
Lending and Lease
Lending and leasing are important economic behaviors in the financial field, and for NFT, whether it is floor or rare, these two methods are It can further unlock liquidity and increase capital utilization efficiency.
NFT loan
The NFT lending platform allows users to borrow liquid assets by mortgaging their NFT to improve the capital utilization efficiency of NFT. In the NFT lending agreement, there are two main mechanisms that can promote NFT as collateralized lending: peer-to-peer lending and peer-to-pool lending.
1) Peer-to-peer lending
< p>
In peer-to-peer lending protocols such as NFTFi< /a>, TrustNFT, etc.), the borrower and lender agree on the terms of the loan (term, loan-to-value ratio, and APR) in a peer-to-peer fashion . Among other things, the matching process is manual, with parties needing to agree on terms and borrowers needing to approve loan offers, so the time to access liquidity can be slow.
However, loan terms can be customized to each user without relying on price oracles, but Expertise is required to perform a valuation.
2) Peer-to-pool lending
Different from peer-to-peer lending, peer-to-pool lending can provide instant liquidity. The NFT lending protocol (such as BendDAO, Drops, etc.) are responsible for the matching process, while Need to rely on price oracles to automate loan terms.
So for these protocols to work, the oracle infrastructure and stable floor prices become important, so most protocols only accept blue-chip assets as collateral.
NFT Leasing
The NFT leasing agreement allows users to rent out their NFT in exchange for a stable fee or future income, such as some goldsmithing guilds lending in-game NFT assets to new players in exchange for their Token obtained in the game in the future. This provides an additional source of liquidity for those users who do not want to give up their assets but want to earn income by idle NFT.
Therefore, NFT leasing is divided into General NFT Leasing Agreement ( Such as reNFT, Rentable , etc.) and for Leasing platforms in the vertical field, such as some game asset leasing platforms that come with GameFi, and some metaverse virtual land leasing platforms.
However, the NFT currently on the market lacks certain practicality, so rent Demand for mainstream NFT assets is generally low. Recently, the general-purpose NFT leasing agreement Rentable officially announced its closure, and the founder also said when summing up the lessons, "NFT is different from ERC-20, and a vertical NFT leasing customization solution should be established."
Summary
< /p>
Due to the emergence of NFT as an irreplaceable Token, it is naturally less liquid than ERC-20 Token. The lack of liquidity has brought about two problems: Insufficient price discovery and Low capital utilization, which further hinder the release of greater potential of NFT.
< p>Therefore, this article explores some ways to provide liquidity for NFT, Some NFT AMMs like Sudoswap are highlighted. However, the development and experimentation of NFT financialization has just begun, and the foundation of a reliable NFT valuation model has yet to be established, and as NFT expands to the wider economy and gains more applications, this will further improve the application of NFT. To more reasonably determine the value of the asset.
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Elixir a>
Elixir is another NFT AMM on Solana, which mainly provides buying, selling and trading collections NFT near the floor price of the product. Elixir aims to distribute market ownership to legitimate value creators, and the platform is co-governed and owned by creators, collectibles, and the community.
At the same time, Elixir provides for Nectar holders For functions such as lending, staking, and derivatives, Nectar will issue 777 tokens for free. However, the official Discord is currently closed, and the specific acquisition rules are still unknown.
Furthermore, creators on Elixir When releasing NFT series, it is also necessary to set a certain percentage of mint income to be locked in the liquidity pool to provide initial liquidity, and when users create a liquidity pool, they also need to Follow the relevant fee structure as determined by Elixir.
hadeswaphadeswap
hadeswap is also an NFT AMM on Solana, users can create their own liquidity pools to Buying, selling and trading NFT has been supported by the recent Solana popular NFT project ABC (abracadabra).
ArraySwap
ArraySwap is an NFT AMM on BSC, which has not yet been officially launched.
NFT Liquidity Agreement
In addition to NFT AMM, the floor price and nearby NFTs in the current NFT collection can also be deposited in the vault (Vault) or liquidity pool of some liquidity agreements and cast into interchangeable ERC-20 Token, and then add the Token to DEX to obtain liquidity indirectly.
At the same time, it is not limited to NFT near the floor, it can also be same price level< /b>'s NFT creates a liquidity pool. NFTs in a price tier can also be considered fungible as long as there is sufficient supply.
Home, but open the buyer pool to those who want to buy any "same group of NFT", providing a faster liquidity time than ordinary market sales, and NFT-LP protocols such as NFTX and NFT20 are exactly that A market built on a liquidity pool similar to the "NFT asset group".
NFTXNFTX
NFTX is a market and liquidity protocol designed to realize NFT transactions, NFT collection Investors can deposit the entire NFT in a vault of NFTX to mint interchangeable ERC-20 vTokens.
The vToken represents the value deposited in NFT, each NFT in the vault comes from NFT of the same collection. At any time, the NFT collector can use these vTokens to purchase a random NFT asset from the vault, or redeem a specific NFT from the same vault for an additional fee.
One of the features supporting the NFTX model is that vTokens can establish ERC-20 corresponding flow pools on Uniswap and Sushiswap, such as CryptoPunks series ETH - PUNK LP, so users can obtain instant liquidity of NFT with the help of highly liquid vToken.
Retail investors who want to invest in CryptoPunks can also invest by purchasing PUNK. In addition, collectors can also stake their vTokens in the liquidity pool, and every time someone buys or sells an NFT, the staker can earn a fee income.
NFT20 (MUSE DAO)
NFT20 is a decentralized NFT transaction that allows individuals Trade, sell and swap NFTs. Similar to NFTX, NFT20 allows NFT holders to add their NFT (such as BAYC) to a liquidity pool, and in return, they will receive 100 ERC-20 tokens that are interchangeable in the specific liquidity pool.
These ERC-20 Tokens can be traded on DEXs such as Uniswap or deposited as liquidity, and other NFTs in the NFT collection can be purchased in the corresponding liquidity pool. In addition, some NFT20 liquidity pools Liquidity mining incentives are also provided, and users can obtain the local Token (MUSE) of NFT20.
It is worth mentioning that if the NFT holder thinks his NFT price is higher, he can choose to create a Dutch auction on the NFT20 asset page, so that he can get a higher ERC-20 Token price when selling NFT.< /p>
In summary, after trade-offs, NFTX and NFT20 have played a role in the design of the liquidity mechanism A certain demonstration effect. However, due to the uniqueness and diversification of NFT, it still brings challenges to finding liquidity.
< /p>
For some rare NFTs, they tend to occupy a higher value. Although the financialization protocol for floor NFTs can unlock more liquidity, we are looking for liquidity solutions for rare NFTs There is still a lot of untapped value.
Auction
< p>
Auction is a better way to provide liquidity for rare NFTs, and often brings great profits to creators (such as auctions of rare NFTs such as BAYC and CryptoPunk on Christie’s and Sotheby’s), and high-profile bidding wars have played no small role in bringing NFTs to the market.
However, as a means of price discovery,the capital utilization efficiency of auctions is very low or even lower than that of direct deal because it requires bidders to lock up capital, and capital lock-up among multiple bidders can often exceed the price at which the asset is ultimately sold.
< /p>
Additionally, auctions often require pre-negotiations with potential buyers or extensive marketing efforts to draw attention to the sale, which takes a long time b>.
NFT Fragmentation Protocol
< p>The fragmentation protocol of NFT is another way to help deepen the liquidity of rare NFT. The fragmentation protocol involves "split" NFT into multiple part, and then converted into an alternative Token to obtain liquidity in DEX.
This allows users to obtain fractional ownership of some highly sought-after and rare NFTs, whileWithout paying high costs, while increasing access to rare NFTs and building new communities.
UniclyUnicly
Unicly is a permissionless fragmentation protocol for combining, A collection of NFTs (which can be different series of NFTs) is locked in Unicly’s smart contract to create a Vault, and an ERC-20 uToken is minted, and then the uToken is added to Unicswap (a fork product of Uniswap V2) to complete pricing and obtain liquidity .
When uToken holders reach a certain ratio, they can vote to unlock the Vault. This ratio is set by the Vault creator at the beginning set up. After unlocking, the NFT in the Vault can be bid for by the highest bidder, and uToken holders can receive part of the ETH paid by the bidder.
In addition, Unicly issued a governance token (UNIC), the holder can lock the UNIC Earn xUNIC, and xUNIC holders earn 0.05% of the Unicly protocol. This part of the revenue comes from the 0.3% transaction fee charged to users for trading uTokens on Unicswap, and the remaining 0.25% fee goes to uTokens liquidity providers.
Fractional (Tessera )
Fractional is another decentralized NFT fragmentation protocol, users NFT can be locked in Fractional's Vault, and a certain number of ERC-20 Tokens can be minted. At the same time, the specific names, symbols and reserve prices of these Tokens are also set by the creators.
Then, creators need to distribute these Tokens, and end users can buy them directly on Uniswap. Token holders can vote to update the reserve price of the NFT auction, and start bidding to buy NFT after fully voting and negotiating the price. After the auction, holders can earn a profit by exchanging their tokens for ETH.
The difference between Fractional and liquidity protocols like NFTX and NFT20 is that once the NFT is deposited In Fractional's Vault, NFTs will be auctioned without any revenue generation mechanism, while NFTs deposited on NFTX and NFT20 will be locked in the revenue generation pool.
But in general, there are still ways to provide liquidity through NFT fragmentation protocols Certain limitations. It will make people more willing to trade parts of rare NFTs, which increases the difficulty of market making based on the customization characteristics of complete rare NFTs, while introducing complexity of ownership and governance.
In addition, fragmentation also reduces the composability of assets, making rare NFT Portions of are often of little use outside of the system.
Lending and Lease
Lending and leasing are important economic behaviors in the financial field, and for NFT, whether it is floor or rare, these two methods are It can further unlock liquidity and increase capital utilization efficiency.
NFT loan
The NFT lending platform allows users to borrow liquid assets by mortgaging their NFT to improve the capital utilization efficiency of NFT. In the NFT lending agreement, there are two main mechanisms that can promote NFT as collateralized lending: peer-to-peer lending and peer-to-pool lending.
1) Peer-to-peer lending
< p>
In peer-to-peer lending protocols such as NFTFi< /a>, TrustNFT, etc.), the borrower and lender agree on the terms of the loan (term, loan-to-value ratio, and APR) in a peer-to-peer fashion . Among other things, the matching process is manual, with parties needing to agree on terms and borrowers needing to approve loan offers, so the time to access liquidity can be slow.
However, loan terms can be customized to each user without relying on price oracles, but Expertise is required to perform a valuation.
2) Peer-to-pool lending
Different from peer-to-peer lending, peer-to-pool lending can provide instant liquidity. The NFT lending protocol (such as BendDAO, Drops, etc.) are responsible for the matching process, while Need to rely on price oracles to automate loan terms.
So for these protocols to work, the oracle infrastructure and stable floor prices become important, so most protocols only accept blue-chip assets as collateral.
NFT Leasing
The NFT leasing agreement allows users to rent out their NFT in exchange for a stable fee or future income, such as some goldsmithing guilds lending in-game NFT assets to new players in exchange for their Token obtained in the game in the future. This provides an additional source of liquidity for those users who do not want to give up their assets but want to earn income by idle NFT.
Therefore, NFT leasing is divided into General NFT Leasing Agreement ( Such as reNFT, Rentable , etc.) and for Leasing platforms in the vertical field, such as some game asset leasing platforms that come with GameFi, and some metaverse virtual land leasing platforms.
However, the NFT currently on the market lacks certain practicality, so rent Demand for mainstream NFT assets is generally low. Recently, the general-purpose NFT leasing agreement Rentable officially announced its closure, and the founder also said when summing up the lessons, "NFT is different from ERC-20, and a vertical NFT leasing customization solution should be established."
Summary
< /p>
Due to the emergence of NFT as an irreplaceable Token, it is naturally less liquid than ERC-20 Token. The lack of liquidity has brought about two problems: Insufficient price discovery and Low capital utilization, which further hinder the release of greater potential of NFT.
< p>Therefore, this article explores some ways to provide liquidity for NFT, Some NFT AMMs like Sudoswap are highlighted. However, the development and experimentation of NFT financialization has just begun, and the foundation of a reliable NFT valuation model has yet to be established, and as NFT expands to the wider economy and gains more applications, this will further improve the application of NFT. To more reasonably determine the value of the asset.
Welcome to join the official BlockBeats community:
Telegram Subscription Group: https://t.me/theblockbeats
Telegram Discussion Group: https://t.me/BlockBeats_App
Official Twitter Account: https://twitter.com/BlockBeatsAsia
NFTX
NFTX is a market and liquidity protocol designed to realize NFT transactions, NFT collection Investors can deposit the entire NFT in a vault of NFTX to mint interchangeable ERC-20 vTokens.
The vToken represents the value deposited in NFT, each NFT in the vault comes from NFT of the same collection. At any time, the NFT collector can use these vTokens to purchase a random NFT asset from the vault, or redeem a specific NFT from the same vault for an additional fee.
One of the features supporting the NFTX model is that vTokens can establish ERC-20 corresponding flow pools on Uniswap and Sushiswap, such as CryptoPunks series ETH - PUNK LP, so users can obtain instant liquidity of NFT with the help of highly liquid vToken.
Retail investors who want to invest in CryptoPunks can also invest by purchasing PUNK. In addition, collectors can also stake their vTokens in the liquidity pool, and every time someone buys or sells an NFT, the staker can earn a fee income.
NFT20 (MUSE DAO)
NFT20 is a decentralized NFT transaction that allows individuals Trade, sell and swap NFTs. Similar to NFTX, NFT20 allows NFT holders to add their NFT (such as BAYC) to a liquidity pool, and in return, they will receive 100 ERC-20 tokens that are interchangeable in the specific liquidity pool.
These ERC-20 Tokens can be traded on DEXs such as Uniswap or deposited as liquidity, and other NFTs in the NFT collection can be purchased in the corresponding liquidity pool. In addition, some NFT20 liquidity pools Liquidity mining incentives are also provided, and users can obtain the local Token (MUSE) of NFT20.
It is worth mentioning that if the NFT holder thinks his NFT price is higher, he can choose to create a Dutch auction on the NFT20 asset page, so that he can get a higher ERC-20 Token price when selling NFT.< /p>
In summary, after trade-offs, NFTX and NFT20 have played a role in the design of the liquidity mechanism A certain demonstration effect. However, due to the uniqueness and diversification of NFT, it still brings challenges to finding liquidity.
< /p>
For some rare NFTs, they tend to occupy a higher value. Although the financialization protocol for floor NFTs can unlock more liquidity, we are looking for liquidity solutions for rare NFTs There is still a lot of untapped value.
Auction
< p>Auction is a better way to provide liquidity for rare NFTs, and often brings great profits to creators (such as auctions of rare NFTs such as BAYC and CryptoPunk on Christie’s and Sotheby’s), and high-profile bidding wars have played no small role in bringing NFTs to the market.
However, as a means of price discovery,the capital utilization efficiency of auctions is very low or even lower than that of direct deal because it requires bidders to lock up capital, and capital lock-up among multiple bidders can often exceed the price at which the asset is ultimately sold.
< /p>
Additionally, auctions often require pre-negotiations with potential buyers or extensive marketing efforts to draw attention to the sale, which takes a long time b>.
NFT Fragmentation Protocol
The fragmentation protocol of NFT is another way to help deepen the liquidity of rare NFT. The fragmentation protocol involves "split" NFT into multiple part, and then converted into an alternative Token to obtain liquidity in DEX.
This allows users to obtain fractional ownership of some highly sought-after and rare NFTs, whileWithout paying high costs, while increasing access to rare NFTs and building new communities.
UniclyUnicly
Unicly is a permissionless fragmentation protocol for combining, A collection of NFTs (which can be different series of NFTs) is locked in Unicly’s smart contract to create a Vault, and an ERC-20 uToken is minted, and then the uToken is added to Unicswap (a fork product of Uniswap V2) to complete pricing and obtain liquidity .
When uToken holders reach a certain ratio, they can vote to unlock the Vault. This ratio is set by the Vault creator at the beginning set up. After unlocking, the NFT in the Vault can be bid for by the highest bidder, and uToken holders can receive part of the ETH paid by the bidder.
In addition, Unicly issued a governance token (UNIC), the holder can lock the UNIC Earn xUNIC, and xUNIC holders earn 0.05% of the Unicly protocol. This part of the revenue comes from the 0.3% transaction fee charged to users for trading uTokens on Unicswap, and the remaining 0.25% fee goes to uTokens liquidity providers.
Fractional (Tessera )
Fractional is another decentralized NFT fragmentation protocol, users NFT can be locked in Fractional's Vault, and a certain number of ERC-20 Tokens can be minted. At the same time, the specific names, symbols and reserve prices of these Tokens are also set by the creators.
Then, creators need to distribute these Tokens, and end users can buy them directly on Uniswap. Token holders can vote to update the reserve price of the NFT auction, and start bidding to buy NFT after fully voting and negotiating the price. After the auction, holders can earn a profit by exchanging their tokens for ETH.
The difference between Fractional and liquidity protocols like NFTX and NFT20 is that once the NFT is deposited In Fractional's Vault, NFTs will be auctioned without any revenue generation mechanism, while NFTs deposited on NFTX and NFT20 will be locked in the revenue generation pool.
But in general, there are still ways to provide liquidity through NFT fragmentation protocols Certain limitations. It will make people more willing to trade parts of rare NFTs, which increases the difficulty of market making based on the customization characteristics of complete rare NFTs, while introducing complexity of ownership and governance.
In addition, fragmentation also reduces the composability of assets, making rare NFT Portions of are often of little use outside of the system.
Lending and Lease
Lending and leasing are important economic behaviors in the financial field, and for NFT, whether it is floor or rare, these two methods are It can further unlock liquidity and increase capital utilization efficiency.
NFT loan
The NFT lending platform allows users to borrow liquid assets by mortgaging their NFT to improve the capital utilization efficiency of NFT. In the NFT lending agreement, there are two main mechanisms that can promote NFT as collateralized lending: peer-to-peer lending and peer-to-pool lending.
1) Peer-to-peer lending
< p>
In peer-to-peer lending protocols such as NFTFi< /a>, TrustNFT, etc.), the borrower and lender agree on the terms of the loan (term, loan-to-value ratio, and APR) in a peer-to-peer fashion . Among other things, the matching process is manual, with parties needing to agree on terms and borrowers needing to approve loan offers, so the time to access liquidity can be slow.
However, loan terms can be customized to each user without relying on price oracles, but Expertise is required to perform a valuation.
2) Peer-to-pool lending
Different from peer-to-peer lending, peer-to-pool lending can provide instant liquidity. The NFT lending protocol (such as BendDAO, Drops, etc.) are responsible for the matching process, while Need to rely on price oracles to automate loan terms.
So for these protocols to work, the oracle infrastructure and stable floor prices become important, so most protocols only accept blue-chip assets as collateral.
NFT Leasing
The NFT leasing agreement allows users to rent out their NFT in exchange for a stable fee or future income, such as some goldsmithing guilds lending in-game NFT assets to new players in exchange for their Token obtained in the game in the future. This provides an additional source of liquidity for those users who do not want to give up their assets but want to earn income by idle NFT.
Therefore, NFT leasing is divided into General NFT Leasing Agreement ( Such as reNFT, Rentable , etc.) and for Leasing platforms in the vertical field, such as some game asset leasing platforms that come with GameFi, and some metaverse virtual land leasing platforms.
However, the NFT currently on the market lacks certain practicality, so rent Demand for mainstream NFT assets is generally low. Recently, the general-purpose NFT leasing agreement Rentable officially announced its closure, and the founder also said when summing up the lessons, "NFT is different from ERC-20, and a vertical NFT leasing customization solution should be established."
Summary
< /p>
Due to the emergence of NFT as an irreplaceable Token, it is naturally less liquid than ERC-20 Token. The lack of liquidity has brought about two problems: Insufficient price discovery and Low capital utilization, which further hinder the release of greater potential of NFT.
< p>Therefore, this article explores some ways to provide liquidity for NFT, Some NFT AMMs like Sudoswap are highlighted. However, the development and experimentation of NFT financialization has just begun, and the foundation of a reliable NFT valuation model has yet to be established, and as NFT expands to the wider economy and gains more applications, this will further improve the application of NFT. To more reasonably determine the value of the asset.
Welcome to join the official BlockBeats community:
Telegram Subscription Group: https://t.me/theblockbeats
Telegram Discussion Group: https://t.me/BlockBeats_App
Official Twitter Account: https://twitter.com/BlockBeatsAsia
