Table of Contents
1. The Problem & Possible Solutions of Liquidity in NFTs
2. Important Aspects for Immediate Consideration
3.1 Platform Overall Mechanism
3.2 Platform Interface & Additional Features
4. Platforms with Similar Concepts
5. Comparison of the Platforms Features
6. Comparison of Other Aspects (Marketing, Team, Partnerships etc.)
6.1 Possible Feature to Differentiate From Others
6.2 The Concept of NFT Perp itself
1.The Problem & Possible Solutions of Liquidity in NFTs
We hear “Illiquidity is a Feature not a Bug”, when it comes to NFTs.
The typical way of accessing the “value” of NFTs is the Floor Price which is just the lowest asking price, and does not necessarily mean that there is a bid at that price.
Hence, holders are not able to market sell and “dump” their NFTs on the market as and when they like.
The floor price simply determines the lowest asking price for a given NFT collection. This is even more apparent when it comes to less popular projects, or once popular/trending projects, where even the “floor price”.
Therefore we can identify the issues and challenges faced by NFTs holders and speculators, which brings the want and need for NFT Perpetuals.
Finding ways to hedge the illiquidity in NFTs
Directional exposure to NFT projects they may not be able to afford.
E.g. They cannot afford to buy a BAYC, but they can afford to put $100 on a 10x long position on BAYC
Basically speculation in general.
2. Important Aspects for Immediate Consideration
Derivation of Price
In a typical Derivatives Exchange, these are basically the two important prices we look at. Therefore since this concept has been proven “to work” there is some attempt to replicate something similar in NFTs Perpetuals..
To derive the value of a NFT, using the floor price as a reference could pose several issues. This is because the floor price is not a bid for holders to be able to market sell into. It is basically the lowest price that is listed by the holders themselves.
Therefore, using floor price as an Oracle is not an accurate way to assess the fair price of an NFT. Furthermore, there would be several issues from spoofing of orders.
Hence, there has not been an accurate way to assess how to derive the price of an NFT fairly, and therefore we can see that although there is a need for such a product, there has not been any innovation that solves this problem yet.
In this article below, Paradigm has described the floor perpetual, which is a synthetic NFT that tracks the floor price of a given project and can be minted by locking up NFTs from that project.
Source:
https://www.paradigm.xyz/2021/08/floor-perps
3. Nftperp.xyz
Currently as at 17 Feb 2023, it offers the Private Beta and Paper Trading.
There is a Private Beta application form where you would need to fill in to be eligible, however, paper trading is available to all.
Paper Trading
Allows you to get mock WETH to try out the platform.
Private Beta
Launched on 25 Nov 2022, you need to be on the whitelist or fill up a Google Doc Form to apply.
Uses real WETH.
3.1 Platform Overall Mechanism
Nftperp.xyz uses the Virtual AMM (vAMM) based model, where there are no order books, and no liquidity providers.
About vAMM by Perpetual Protocol:
https://blog.perp.fi/a-deep-dive-into-our-virtual-amm-vamm-40345c522eeb
The Platform Overall Mechanism at a glance, and basically how it works is broken down below.
3.2 Platform is user friendly, and at first glance has a Crypto-Native feel.
Roadmap:
https://nftperp.notion.site/Roadmap-7bda72d630fb41f497a72e054570bd45
3.3 Some Data on Private Beta
From 25 Nov 2022 till 16 Feb 2023, there have been 1472 Unique Traders with 26,545 Trades made on Private Beta.
Most users seem to want upside exposure to NFTs they cannot afford, and this is apparent just looking at Private Beta Long vs Short Ratio where majority are trying to long, with one outlier which is Punks.
However, others might just want to trade the price of the NFTs itself.
3.4 Social Engagement
4. Platforms with Similar Concepts
5. Comparison of the Platforms Features
We take a look at the current features they offer.
6. Comparison of Other Aspects (Marketing, Team, Partnerships etc.)
7. Food For Thought
There has been discussion going on about wanting to short NFTs in general, therefore, such a platform would definitely garner some interest among those within the crypto space.
6.1 Specific NFT vs Whole Project
Specific NFT vs Whole Project
Allows “targeting” of certain holders that the community might want to “bet” against. This is a possible idea because e.g. if a certain Punks holder is dumping another token on-chain, people can rally together to short the Punk he owns, rather than the entire project itself, which might has less effect.
However, there is certainly some difficulty, as assessing a whole project’s NFT is not easy, let alone individual NFTs which are usually unique by nature.
SynFutures seems to be able to do this as it uses Fractionalized NFT Spot Prices.
Source: https://medium.com/synfutures/nft-futures-474fb891ed3c
6.2 The Concept of NFT Perp itself
Getting actual direct exposure to the NFT price itself is extremely difficult to do “fairly” and there are many risks for exploits. Probably a way to do it is only offering established NFT Projects with the floor price to derive it (average of floor price?),
Probably some perpetual exchange offering synthetic derivatives can offer nft exposure, but we will still need a dedicated NFT Perpetual Platform.
This is something definitely worth exploring as NFT Perpetuals will definitely get those who are involved within the Crypto Space’s attention easily.
When the Crypto Space has more adoption and there is less volatility, this could work in the long term.
What are your thoughts about NFT Perpetuals and the potential of it?
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