NFT Liquidity Option Comparison
Comparison in table form
Features
Deposit NFT in a vault to mint a Synthetic Token (ERC20) that represents 1 random NFT in the vault.
This ERC20 can be put in a liquidity pool with another token and be traded freely.
The Synthetic token can be used to swap for a random NFT in the vault or swap for a chosen NFT in the vault at a premium - 1.05 Synthetic Token instead (it can be higher depending on the fee set in the vault)
You can
Buy NFT with ETH or other tokens (Buy synthetic token and swap for the NFT)
Sell NFT for ETH or other tokens (Mint 1 synthetic token and sell the synthetic token at the AMM)
Stake NFTs for vault fees (earning APR in the synthetic tokens)
Single Sided Staking
LP Staking (impermanent loss)
Basically Uniswap for NFTs.
Create an AMM (NFT/ERC20 Pool) for an NFT Collection. Can have multiple pools for one collection. Example:
Pool A for common rarities,
Pool B for rarer NFTs,
Pool C for a certain trait of the NFT
Different type of bonding curves available
x*y = k
Linear (Price increase by flat amount when bought)
Exponential (Price increase by % when bought)
You can
Buy NFT with ETH or other tokens
Sell NFT for ETH or other tokens
Deposit NFT/ERC20 to get SYNTH/ERC20 LP tokens on a certain AMM.
Send SYNTH/ERC20 LP to contract to get back NFT/ERC20 after impermanent loss etc.
Note that SYNTH is the synthetic token that represents the NFT collection.
Limitations
You could lose the original NFT you used for minting the synthetic token
Not Shrimp-Friendly (Gas Fees staking and withdrawing might be more than yield)
Due to the nature of fractionalisation, some NFTs can become unredeemable if all the synthetic tokens are spread across different wallets / protocols.
Difficult for retail users to understand and setup
Lack of Incentive (for now)
Malicious liquidity providers can “rugpull”
Gas Fees
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