The evolution of NFT Trading - Perpetual Futures

NFTs have experienced an explosion in growth over the past three years, but the glaring issue with this new asset class is its long-only nature. If floor prices are not rising, opportunities for profit are scarce. NFTs, by their nature of being non-fungible, present a slew of problems and flaws that have not been addressed by the market, including:

  • Blue Chip collections such as BAYC and CryptoPunks are inaccessible to most participants due to their high floor prices

  • Lack of hedging strategies for NFT holders

  • High creator royalties (and/or marketplace fees) that cut into profits

Enter NFT Perpetuals

With the introduction of perps, NFT traders have a better NFT trading experience in terms of friction, sizing, and leverage.

With perps, traders can now gain price exposure to an NFT without owning the underlying asset, allowing traders to frictionlessly enter or exit an NFT position. Further, perps allow anyone to gain exposure to any NFT collection of any size, allowing retail and smaller traders to take positions in the NFT markets they otherwise could not. It also allows larger players to trade in size without instantly impacting the spot floor price by sweeping or dumping, which in turn offers better pricing and less friction. Lastly, prior to NFT perps, NFT traders would need to borrow against their existing NFTs on NFT lending platforms in order to gain leverage on their NFTs. With NFT perps, NFT traders can use multiple forms of collateral and use a direct platform to use those borrowed funds. For example, traders can take a position in Azuki NFT using ETH as collateral and settle in ETH when exiting, making NFT trading more seamless and frictionless in the process.

The tweet highlights two of the earliest NFT perp products, including NFTPerp and Tribe3, both aiming to solve the issues highlighted above and introduce a new financial primitive into the world of NFTs. While both are currently still in beta, users can take advantage of the retroactive airdrop on NFTPerp to earn rewards based on the volume traded. Collections that are available include BAYC, MAYC, Azuki, Punks, Pudgy Penguins, and Milady on NFTPerp.

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