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NFTX: Make your NFT flow｜Project Introduction

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NFTX is a platform for issuing ERC20 tokens whose value is backed by NFT collectibles.

The liquidity of NFT has always been criticized, and it takes days or even months to complete a transaction, which discourages many investors who want to join the NFT field. For a long time, NFT can only be hung in markets such as OpenSea to wait for selection, but cannot be circulated on various trading platforms like ERC20 tokens.

So, have you been looking forward to the birth of such a platform that can convert your Zombie Cryptopunk NFT into ERC20 Tokens, trade them on platforms such as Uniswap, and even convert them into another Zombie Cryptopunk NFT?

Or, you do not hold a certain type of NFT, but you are very optimistic about its prospects and want to invest in it But I am worried about the liquidity of funds. Is there a platform that allows you to join the ranks of NFT investors without worrying about the poor liquidity of NFT?

Introduction to NFTX

NFTX is a platform for issuing ERC20 tokens whose value is backed by NFT collectibles. These tokens are called “Funds” and like all ERC20 tokens, they are fungible and combinable. Using NFTX, users can issue and trade funds backed by their favorite NFT collectibles like CryptoPunks, Axies, CryptoKitties, and Avastars directly from DEXes like Uniswap.

There are two types of funds on NFTX.

-D1 Fund has a 1:1 backing between a single NFT contract and an ERC20 contract. For example, if a user has 2 PUNK-ZOMBIE funds, it means that the user can redeem two Zombie Cryptopunks at any time.

-D2 fund is a Balancer pool integrating D1 fund. For example, PUNK is a D2 fund that combines 5 different D1 funds such as PUNK-BASIC, PUNK-FEMALE, etc. The idea is to provide more diversified exposure without requiring users to hold multiple tokens.

When creating a fund, the account sending the trade will be designated as the fund manager. This will allow creators to change fund parameters such as fees, liquidity provider rewards, and NFT exchange eligibility, among others. When the creators have finished making changes to the fund, they can "seal" the fund, meaning they relinquish control for added credibility.

Target users

Many people misunderstand NFTX, they think NFTX is NFT Collectors will only be exposed to items, but in fact most NFT collectors like to browse and trade "independent" NFTs, so there is no reason for them to convert slot machine collectibles into homogeneous tokens.

However, since many people in the encryption field do not have time to learn and understand NFT-related knowledge, they cannot decide whether they should trade "independent "NFT decision, but they are eager to get in touch with the NFT market. And these people are the target users of NFTX. They will trade PUNK tokens on Uniswap instead of minting PUNK or exchanging PUNK for Cryptopunk NFT on the NFTX website. Most of the time, only arbitrageurs mint or redeem fund tokens. This is similar to the dynamics of WBTC. Most people who trade WBTC do not mint or burn it themselves.

NFTX only has D1 funds at the beginning, so at the beginning, the homepage will list very specific funds (eg PUNK-ATTR-4), however once D2 funds (eg PUNK) are created, the home page can shift focus to these funds.

The idea of NFTX is to make the website similar to CoinMarketCap or DefiPulse in the NFT field. Once users land on the home page, they see indicators for top funds such as PUNK, KITTY, AXIE, AVASTR, GLYPH, and JOY. Eventually, NFTX is expected to be home to over a hundred top NFT funds, each of which will provide real-time price, volume, and TVL data.

Token rights and distribution

NFTX smart contracts use upgradable proxies that are controlled by the NFTX DAO (on the Aragon mainnet). This means that NFTX token holders have the power to change the NFTX smart contract if users reach a consensus. Currently, all changes require 80% of the tokens to vote in favor of the proposal to pass, and the voting time is 24 hours. In the future, NFTX can propose to lower the support threshold and increase the duration (such as 65% support within 5 days), but currently the shorter voting time allows the NFTX platform to update faster, and the 80% threshold helps prevent governance attacks.

The supply of NFTX tokens is 650,000 pieces, and the distribution method is as follows:

Founder: 10%, unlock after 5 years

NFT provider: 30%

ETH provider: 30%

NFTX liquidity: 10%

Liquidity mining: 20%< /p>

It is very important to maintain the liquidity of popular funds, so the community public offering will accept ETH and existing D1 fund tokens Category NFT. The NFTX team hopes to let NFTX DAO raise enough NFT and ETH to provide liquidity for the AMM pool. The NFTX team hopes to let NFTX DAO raise enough NFT and ETH to provide liquidity for the AMM pool. It is meaningful for NFTX DAO to be an LP, because it can improve the liquidity of funds and at the same time earn income for the treasury.

Platform Management

NFTX According to the team, the process of creating a fund was inspired by the process of creating a pool on Balancer. In short, the pool creator will be granted "manager" permissions, but may choose to relinquish control by calling the "finalize" function. Like the Balancer pool, the NFTX fund also has a finalize function, but unlike Balancer, when the NFTX finalize function is called, then the control of the fund will be handed over to the NFTX DAO for the following reasons.

The number one reason why DAOs are given treasury management privileges is that, in some cases, funds need ongoing governance (such as adding new qualifications); the second reason is more controversial, the reason why the DAO gets management authority is that the team can guide the platform to develop in the way the team sees fit.

For example, if funds start cannibalizing each other (e.g. multiple funds targeting a similar subset of NFTs), then This could hurt the user experience of our platform, so in this case we could decide to close all but one of our funds so that the one remaining fund can prosper.

NFTX aims to provide a top-tier fund that has access to most of the liquidity in every major NFT contract. If someone wants to create a PUNK-V2 fund different from the main PUNK fund, then that's a good idea (actually the NFTX team encourages it), but if we get into a situation where PUNK-V2 splits away half of PUNK liquidity, and there is an easy workaround (such as merging diffs), then the DAO could consider doing so.

Moats and Value Capture

In the long run, NFTX aims to form a moat as the main issuer of wrapped NFT funds.

This is a potentially huge use case, and could one day exceed the combined market capitalization of all cryptocurrencies today. Digital land, in-game items, rental agreements, digital artwork, digital collectibles, digital lotteries, and more can all be represented with NFTs. As the NFT ecosystem grows, it will become increasingly difficult for people to keep track, and tokenized funds will become a necessity for many investors and trading platforms.

In terms of value capture, a 2.5% fee on all NFTX minting and burning operations in the future is not inconceivable. This added cost will be mostly absorbed by arbitrageurs and decouples the fund tokens slightly. For a wrapped token like WBTC, a 2.5% price difference from regular BTC would be a significant UX flaw, but for NFT funds (representing an inherently illiquid asset class), a 2.5% price difference would be a significant UX flaw. The price difference may not be noticed.

Growth Pathway

-NFT Lending

The minting of D1 fund tokens (such as PUNK-BASIC or GLYPH) requires the submission of NFTs, and in many cases, people do not want to give up NFTs ownership of. These people would prefer to lock up their NFTs in exchange for a loan (similar to minting Dai with ETH). By having a surplus of D1 tokens in the NFTX library, the NFTX platform will be able to provide low-interest ERC20 loans to NFT collectors. Additionally, these loans will not be at risk of accidental liquidation, as the NFTs will always be worth at least as much as the D1 funding they are eligible for.

-On-chain liquidity

One of the biggest problems in the NFT space is pricing. Unless market makers have a good understanding of NFTs, it will be difficult for them to determine the true price of the asset. One of the reasons is wash trading, another is illiquidity and the gap between two sales. With the real-time price feedback of popular funds, these two problems are largely solved. If a trader can find out that PUNK-ATTR-4 is 150% of the price of PUNK-BASIC, and the price of PUNK-ZOMBIE is 60ETH, then they can be sure that the price of a Zombie CryptoPunk with four characteristics should be 150% of 60ETH. % or so, that is 90ETH. As this problem improves, it is not difficult to imagine that when NFTX enters the on-chain liquidity game, NFT market makers will be able to automatically formulate strategies and strive to become a "Kyber in the NFT field" to some extent.

-Blind box and gift card

Having a large NFT reserve opens up many possible use cases for NFTX. One of the possibilities is to provide blind box gameplay, where different NFTs have different chances of being drawn (for example, a 20% chance of receiving a Zombie CryptoPunk). Another possibility is gift cards. Currently, when users redeem NFTs by burning fund tokens, the NFT they receive is randomly selected, however, NFTX has the potential to extend the smart contract so that (for an additional fee) users can choose the exact NFT they want. This will be similar to a gift card, enabling the recipient to enjoy the process of choosing their own unique item from the NFTX reserve.