DeFi evolution status of NFT: Fragmentation platform solves the liquidity problem of rare NFT, and waist NFT faces greater challenges

Shenyu, co-founder and CEO of Cobo and co-founder of F2Pool, recently analyzed the evolution status of DeFi of NFT by taking CryptoPunks as an example.

God fish expresses, the CryptoPunks floor price of recent fire already reached 140ETH, for most people this price is more expensive. However, users can use the NFT fragmentation platform to package one or more NFTS, generate ERC20 tokens and make market in Uniswap. In this way, retail investors can participate in the secondary market with a small amount of money, while on the other hand, it provides a new liquidity for large or rare NFT holders of CryptoPunks, so that they can also liquidate their expensive NFT. At the same time, if the Token price is inconsistent with the NFT market price, users holding a certain percentage of tokens can vote to auction off the NFT in the vault, and the Token will be automatically converted into ETH.

Shenyu concluded that the current basic model is: retail investors, issuers and NFT market game may have positive and negative feedback amplification phenomenon.

NFTX, another NFT fragmentation platform, can convert NFT Mint into the same Token. For example, turn any Punk Mint into a $0.95 Punk (5% fee) and then spend $1.05 to extract an NFT from the Punk vault. PUNK tokens can be mined in SushiSwap liquidity. Some NFT with poor secondary market sales will be able to exchange Mint for better liquidity (5% lower than market price + about 10% DEX slip point), enhancing NFT liquidity. At the same time, if the price of the PUNK floor rises sharply, you can buy the PUNK and extract NFT arbitrage from the vault, which basically guarantees that the PUNK is bound to the floor price, and all the NFT left in the vault is hard to sell.

According to Shenyu, if the holder's NFT has been purchased at the floor price or the holder has very rare NFT works, then the user does not need to worry about the liquidity problem. In contrast, the waist NFT is in a relatively awkward situation, and the original holder is expected to cash out only when there are people who really love this type of NFT in the market willing to bid for it.

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