Key Points: The NFT derivatives market is making new breakthroughs to keep up with the new game.
NFTperp is a market that trades NFT Options and NFT Futures.
Blur’s issuance has driven the NFT market recovery. Its bid-to-earn system has greatly improved liquidity in the entire NFT market. This article will take this opportunity to sort out the current status of the NFT derivatives industry.OverviewWith the Federal Reserve raising interest rates and a series of thunderstorms, crypto has ushered in another round of deep bears. Looking back to 18 years ago, the market value for crypto fell by 80% after ICO was regulated. Then DeFi innovation appeared and crypto once more refreshed the ATH by 3 times. The blockchain’s transparency and capital efficiency make it possible for the crypto industry to self-correct and iterate at an incredible speed. The NFT market is doing the same. It has been slow for 22 years. The daily trading volume of the NFT market was less than 15,000,000 US dollars in November. In this bear market, BAYC, a representative of blue chip companies, fell by 54% (149-69), and the lowest point is 49E.
DappRadar has analyzed 81 NFT series and found that the market value has fallen from $9.3B at its beginning to $3.7B today to a current level of $3.7B.
The liquidity crisis that followed the launch of BendDAO was caused by a sharp fall in the price for BAYC. The pledge pool was nearly empty.
BAYC launched the APE coin at $5.2, down from $26.7 to $5.2, an 80% drop.
We also saw a huge increase in NFT use cases in 2022. The NFT market is maturing, from the BendDAO Peer to Protocol lending pool to the NFT DEX design by sudoswap. In 2022, there will be a significant increase in NFT collections compared to 2021. It was only 39,300 NFT series at the start of the year. Now it is 226,000, a 475% increase.
DeFi use cases include: Looksrare and Z2Y2 continue to innovate; X2Y2 and X2Y2 use their tokens to encourage users to trade to earn; blur invents and uses Bid to Win to bring more liquidity and Narrower spread; sudoswap’s vAMM design makes NFT purchase more homogeneous tokens; BendDAO lending platforms provide a Peer to Protocol lending method to release NFT’s liquidity more efficiently.
The derivatives market has also seen new breakthroughs: NFT Perp launched contract transaction with NFT Floor price as the index; Hook launched NFT options products that allow users to hedge against falling NFT prices.
The NFTfi products are fairly complete. Blur, which issued coins at 2.14 on Tuesday, greatly improved liquidity in the NFT market. Sudoswap introduced AMM algorithms for NFT purchases and created a new NFT-to-do Market paradigm. Taker will soon launch a new liquidation program for lending. This will be the 23rd year of Taker’s liquidation scheme. The auction model will not be used for liquidation prices. Instead, the assets that trigger them will simulate Aave and then be liquidated directly by the protocol or arbitrageurs. The market is still not discussing NFT derivatives, particularly in the bull-bear conversion. NFT players do not have a solution to the JPGE price drop. They can only accept bid stop loss and diamond hands. This article will provide information about the current industry status of NFT derivatives. While the process of deleveraging can be painful, it can also be a time to review and plan ahead for the next cycle. The NFT market is not perfect at the moment and it is still a long-only one. Profits can only be made by speculators if the NFT floor rises. There is no other way to deal when the market falls than to hold and dump. Many NFTs will not go back to zero, but they will be completely liquid. Sudoswap allows LPs to enter the market and provides liquidity and handling fees. LPs are not able to expand liquidity or hedge their own risks in the current NFT market. Scale and can’t support long-tail assets. The current NFT market is plagued by the following problems: The price of blue-chip NFT can be high and ordinary players are not able to take advantage of the rising blue-chip NFT prices.
Due to the difficulties of liquidation, market-making, and discontinuous price changes, NFT’s financial markets are still very inefficient. The market scale cannot be increased.
It is impossible to shorten NFT prices and hedge position/LP risk.
NFT derivatives are essential for healthy development of NFT market. NFT derivatives can be improved to provide liquidity and more NFT use cases. Common derivatives include options, contracts, and funds. To establish NFT-based contract, you need a continuous NFT price mechanism (oracle device) and an automated market maker that can provide sufficient depth.
Insurance: Insure the theft or loss of NFT according to NFT’s value. The model may look the same as traditional insurance, but it is important to include clauses that are specific to NFT.
Funds: You can either establish “Index funds” based on the value of NFTs or a foundation (similar DAO) with NFTs. Then, you can invest. This form of fund has been tried before, such as Metaverse Index/Whale Token. However, this will not be repeated in future articles.
NFT FuturesNFTperpNFTperp adopts the design of vAMM, no LP is required to establish a liquidity pool, long / short traders are counterparties to each other, the beta mainnet will be launched in November 2022, and the contract supports ETH for 5 NFTs such as AZUKI / BAYC / MAYC / PUNK / Milady series, with a maximum leverage of 10 times.ProductThe transaction adopts the vAMM design, and both sides of the opening position have slippage. The protocol adjusts the k value to adjust the depth of the virtual pool. This is done to avoid excessive slippage due to extreme price fluctuations. To make a profit, one party must settle all losses and profits in the guarantee vault. The price feed uses the True Floor Price model, obtains transaction information from NFTX, and calculates the floor prices through TWAP. This helps to avoid instances such as Franklin manipulating the BAYC price. This round of financing was funded in part by Dialectic and Maven 11, DCV Capital and Gagra Ventures.
TWAP’s Oracle cannot respond quickly to market conditions, such as the rapid fall of BAYC to 48E.
Perp attacks are generally based on Oracle attacks (refer GMX). There is currently no restriction on the ability to open and close positions within seconds.
Core HighlightsThe vAMM model, rather than opening positions with zero slippage like the GMX design, avoids the risk price manipulation and arbitrage.
We have reached cooperation with HOOK, the NFT call option market.
CompetitorsThere are many attempts to sell NFT contracts on the market. Mimicry Protocol, for example, uses the Prediction Market design to allow shorting NFT prices. To complete a transaction, users only need to decide the direction and amount they want to open positions. The long-short ratio of nftperp and funding rate are different. Mimicry uses True Odds for this purpose. True odds only impact profits and not losses. The True Odds for the Short Side would be 0.5x and 2.0x respectively. So, all other things being equal, a long position would double in value if the reference price for this fictional market were to increase by 50%.NFT OptionsPutty&CallyPutty is an OTC marketplace for the creation and trading of options on specific NFTs (single or group) and ERC20 tokens:NFT holder: Pledge NFT, purchase put to hedge against the risk of falling prices
Speculator: Sell ERC tokens to pledge your support and get a premium
ProductThe data of Spicyest provides the floor price for the NFT collection. Players can set parameters such as strike price/premium/expiration date by themselves. The product comes with an option computer that can be used as a guide. However, it is still quite complicated for beginners to options. Volatility is calculated using the log-price returns from the past 90 days and extrapolating them forward by X days.
The Putty team launched a new product, Cally, in March 2022, allowing NFT holders to earn income for their NFT creation and trading covered call options, and can also package multiple NFTs into a Covered Call Vault to set a unified Premium, Strike price and Duration:The auction of Option on Cally adopts the Dutch auction method, and the price decays with time and is first-come-first-served, which protects the interests of NFTholder to the greatest extent;
Because it is a stable long-term profit in options markets, and an extreme market would lose all the principal, Dutch auction design is essentially to protect the yield earner (make more on weekdays) while transferring the risk to risk seekers.
DataOrder Makers 18Matched Order 93Total Volume : $221,342Premium : 8.21 EFinancingMaven11 Capital investment, financing and valuation unknownRiskCapital Inefficiency:Putty is an OTC market for the creation and trading options on specific NFTs (single and group) and ERC20 tokens. The Peer to Peer OTC trading platform relies on Bidder to have sufficient liquidity.
In the event of insufficient Bidder Putty’s collateral ratio must be high (low capital usage rate), and premium costs should be very low (low APY).
Core HighlightsPutty is the first otc market for NFT options, which applies the Black-Scholes formula to the volatility of the NFT market.CompetitorsCompared with nft contracts, nft options have more attempts: Fuku, incubated by @AlphaVentureDAO, has turned the option mint into an ERC-721s NFT. Users do not want to fulfill the options after they expire, so they can transfer and sell them on Looksrare and Opensea; and The Hook that nftperp has reached a partnership with is mainly call options, and feta uses the Write to Ear method to encourage NFT holders to provide liquidity for options, and Jpex has launched option transactions without handling fees.InsuranceInsurance has not tried much in the NFT market. Pixpel is a platform that provides services for Crypto Games. This includes Dex, Market Place, and insurance. Pixepl allows game project partners to collaborate. Players can also buy insurance for their own NFT props. This is equivalent to 70% off the original price. The policy can be renewed up to three times and lasts for 3 months. Market reflectionThe NFT and Crypto market ushered in a wave for a rebound at 2023’s beginning. The following narratives are likely to be used by NFT: Bulur’s Airdrop Anticipation Drives Volume Growth
APE’s staking starts to bring a new wave in the wealth effect
BendDAO has increased NFT pledge rates for blue-chip NFT to increase leverage
SUDO’s airdrop will further boost the fiery NFT markets
However, the inflow of stablecoins is not improving. Binance has been unable to withdraw or deposit US dollars. This puts Binance in a constant net outflow of US Dollars. The market value of USDC/USDT has remained essentially the same over the past three months (without any external capital injection). The Fed’s hawkish attitude and low unemployment rate keep them in a hawkish mode, and the steady rise in interest rates is likely exceed 5. All evidence suggests that deleveraging activities are continuing and that liquidity has not been injected. What happens to this small bull? It’s time for a new round silence. This is the time to start a new round of silence. We encourage you to do your own research before investing.Join us to keep track of news: https://linktr.ee/coincuHaroldCoincu NewsTags: bendDaoDeFiNFTNFT DerivativesNFT DEXnftperpOpenSeaPutty&Cally