NFTPerp Gains Volume Traction As NFT Markets Stage A Comeback

JAN 12, 2023 • 5 Min Read

Yun Heng Lin

 

 

 

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🌅 Welcome!

In a new blog post, Sam-Bankman Fried (SBF) has doubled down on his innocence. Meanwhile, Genesis owes its creditors more than $3B.

Today, we take a look into the volume traction of NFTPerp, while our Research team dives into various NFT distribution models.

This is the Delphi Daily. Let’s dive in.


🚨 In Case You Missed It

  • SBF denies stealing customer funds in a new blog post. He blames the fall of FTX, in part, on a “targeted attack” by Binance.
  • The FT says that Genesis owes more than $3B to creditors, as it considers the sale of its $500M venture capital portfolio.
  • Nexo is under investigation in Bulgaria for money laundering, tax offenses, unlicensed banking, and computer fraud.
  • Liquidators of Alameda Research get liquidated on Aave for $72K while trying to close positions and recover funds.

📊 NFTPerp Gains Volume Traction As NFT Market Revives

  • NFTPerp is a decentralized exchange for perpetual futures on NFT collections. The platform launched a beta version on Nov. 25, 2022 that allows traders to take long or short positions on NFTs with up to 5x leverage.
  • The platform allows small investors to gain exposure to highly sought-after collections like CryptoPunks despite their high floor prices. Additionally, traders can now short NFTs to express a bearish view or hedge other positions.
  • Trading volume on the platform exceeded 16K ETH in December 2022 and remains on track to go even higher this month with over 11K ETH so far. The most traded NFT collection is the Bored Ape Yacht Club with a 40% volume share, followed by Azuki with a 29% volume share.
  • The successful beta launch of the platform indicates a growing interest from NFT traders in such derivatives that merge DeFi and NFTs. However, the low liquidity of many NFT collections leaves their derivatives vulnerable to price manipulation.
  • It is unclear if NFT perpetual futures will gain significant adoption. But these primitives remain worth monitoring since the interactions they enable can potentially make the NFT markets more efficient over time.

⚡ A Deep Dive Into NFT Distribution Models

  • Over the past 2-3 years, NFT teams have experimented with a variety of distribution models. Some models are simple to understand, while others involve a greater degree of complexity (e.g., VRGDA).
  • This is a core component of NFT “tokenomics” and is important for a few reasons. Most importantly, building a vibrant community is usually a top goal for NFT teams, so it’s important to get the NFTs into the hands of the right people that believe in the vision.
  • Additionally, NFTs are often used as a fundraising mechanism for developing teams, so there is an incentive for teams to maximize their selling price. However, maximizing price also leads to less potential upside for the community.
  • Most of the top NFT projects were launched via a standard minting process — a fixed supply and fixed price per mint, usually with some form of allowlist.

  • In a standard mint, the public knows the fixed price and fixed supply of NFTs to be sold prior to the mint. In the early days, teams would launch with a first-come-first-serve public mint. This led to gas wars and a high prevalence of botting during popular mints.
  • These days, teams often employ a whitelisting process to select and reward active community members. Whitelisted members get a guaranteed mint and can sometimes mint at a cheaper price or even for free.
  • There may or may not be a public mint, depending on how much of the supply is allocated for the whitelist and subsequently sold.
  • Some of the advantages of standard mints include a simple and easy model for users to understand, direct control over who gets to join the owner community, an immediate influx of funds for the treasury, and battle-tested contracts used by many NFT projects.

  • Some NFT projects distribute the tokens using a free mint. This model is typically used as a free airdrop for an existing NFT community (e.g., Bored Ape Kennel Club was airdropped to BAYC holders).
  • The model is also used by new projects that are looking to quickly bootstrap a community, or as a marketing tool to exhibit a token of appreciation.
  • The distribution mechanism is similar to standard mints (allowlist or public mint) except that the price is 0. This means that they are not used as a fundraising tool by teams. Despite costing nothing, free mints can reach substantially high prices.
  • Some of the advantages of free mints include no financial barrier to access leading to a more democratized community and the fastest way to bootstrap an initial community.
  • For more on NFT distribution models, Delphi members can read our Delphi Pro report here.

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