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NFTX

NFTX (Ticker: NFTX) is a platform for making ERC-20 tokens backed by  collectibles. These tokens are called funds, and (like all ERC20s) they are fungible and composable[1][2].

Users can create and trade funds based on their favorite collectibles such as CryptoPunks, Axies, CryptoKitties, and Avastars through Decentralized Exchanges (DEXes) like Uniswap[3].

About

  • NFTX is the governance token for the NFTX protocol[4].
  • The project launched in January 2021.
  • There are two types of funds on NFTX: D1 Funds and D2 Funds.

Introduction

Protocol

NFTX (NFTX) was built by a decentralized autonomous organization (DAO), initiated the primary NFT index funds ecosystem on Ethereum. The NFTX smart contracts are permissionless on-chain contracts that make use of an upgradeable proxy that is controlled by the NFTX Dao (on Aragon- which implies that NFTX token holders have the power to change the NFTX smart contracts if they reach consensus) to make ERC-20 tokens that are backed by NFTs collectibles[5].

The interface is built as an open-source organization where users anywhere can join to provide expertise and/or additional resources with the goal to grow NFTXs' success.

NFTX aims to become the primary issuer of NFT index funds, allowing anyone to invest in the NFT markets with no need for underlying knowledge and expertise required when investing in individual assets. By doing so, NFTX will function as a black hole for NFT assets.

NFTX Funds

NFTX has two basic types of funds known as the D1 Funds (or input) and D2 Funds (or top-level). NFTX funds are described below[6]:

D1 Funds (input):

The NFTX's D1 Funds has a 1 ratio 1 backing between a single NFT contract and an ERC-20 contract. Considering this example: Provided James owns two collectibles of PUNK-ZOMBIE, that implies he can redeem exactly two random zombie CryptoPunks at any moment. Another example would be Fred owning 1 AXIE-MYSTIC-2, giving him the ability to redeem one random Axie with two Mystic parts. Described below is a tabulated sample of D1 Funds as defined within the NFTX ecosystem:

Funds TypePriceVolumeSupply
PUNK-BASICTBDTBD122
PUNK-FEMALETBDTBD35
PUNK-ATTR-4TBDTBD27
PUNK-ATTR-5TBDTBD8
PUNK-ZOMBIETBDTBD4
AXIE-ORIGINTBDTBD61
AXIE-MYSTIC-1''"8
AXIE-MYSTIC-2""2

D2 Funds (top-level):

These funds are  pools that combine D1 funds. For example, AVASTR will be a D2 fund that combines three different D1 Avastar input funds (AVASTR-BASIC, AVASTR-RANK-30 & AVASTR-RANK-60). The point of this is to offer more diverse exposure without requiring users to hold multiple tokens.

Utilizing NFTX

NFTX (NFTX) aims to be like CoinMarketCap's website but with specifics for the NFT industry.

Eventually, the hope is for NFTX to become home to over a hundred top-level NFT funds, each of which will feature real-time price, volume and TVL data- NFTX.

NFTX's target audience includes investors, arbitrageurs, and NFT liquidity providers. The functions of this target audience are described below:

Investors:

The main products are built for investors whose interests are to take a well-spread position in the NFT markets through buying into one or multiple NFT index funds. This audience most likely will not come into direct contact with the products offered on the NFTX website, as they will use a DEX like Uniswap or an aggregator such as 1inch.exchange or DEX.AG to invest in the fund on the open markets.

Arbitrageurs

Arbitrageurs are the second audience the NFTX protocol targets, as they can profit from ranging prices between NFT index funds and their underlying collaterals' floor prices.

Liquidity providers

Another pivotal audience NFTX aims to address are Liquidity Providers (LPs), who can profit from providing additional liquidity to one or multiple NFT index funds. Liquidity providers may use the products on NFTX's website to mint additional NFT fund tokens, which can then be supplied as liquidity on a Balancer pool or directly on a DEX[7].

A fourth target audience would be NFT collectors. They are the ones who want to trade their NFT with another NFT of the same category. These collectors can do so by minting a fund token on NFTX's website and redeeming that token right after, giving back a random NFT from the fund.

Minting D1 Tokens:

This is one basic function within NFTX's ecosystem. A D1 token is an ERC-20 token that is backed 1:1 by NFTs from some particular contract. For example, PUNK-BASIC is a D1 fund token that is backed by CryptoPunks. Minting PUNK-BASIC for example could only be done by handing the ownership of a CryptoPunk NFT to the NFTX smart contract. Once owners/users have PUNK-BASIC (for example) they can burn it at any time to redeem a random CryptoPunk from the NFTX reserves. If the only CryptoPunk in the reserves is the one which they transferred (i.e. if the supply of PUNK-BASIC is 1) then they will receive their same CryptoPunk back if/when they redeem. However, if there is a larger supply (for example 42) then it is unlikely a user will redeem the exact amount of CryptoPunk  which they used to own. Therefore, it's important for NFTX users to be sure that they are convenient with parting with an NFT before using it to mint a D1 fund token[8].

Redeeming D1 Tokens:

Users intending to redeem D1 tokens would be required to burn their D1 Fund token (i.e ERC20 token-NFT backed- collectibles) at any time to redeem a random it from the NFTX reserves.

NFTX's Growth Avenue

The avenues for growing the NFTX's ecosystem is edged on the following:

NFT-ERC20 Loans:

To mint a D1 Fund token requires handing over an NFT, and in many cases, people will want the benefits of a fund token without having to give up ownership of their NFT. These people would prefer to lockup their NFT in return for a loan (similar to minting Dai with ETH). By having a surplus of D1 tokens in the NFTX treasury, the protocol will be able to provide low-interest ERC-20 loans to NFT collectors. Furthermore, these loans are slated to have zero risks of unexpected liquidation because NFTs are always worth at least as much as the D1 funds for which they are eligible.

On-Chain Liquidity:

One big concern in the NFT industry is price discovery. Unless market makers are equipped with knowledge, it can be demanding for them to determine the real price of an asset. One reason for this is wash-trading. Having real-time price feeds from popular funds largely solves both of these issues. Refer to the example below:

As a concrete example, if a trader can check that PUNK-ATTR-4 is 150% the price of PUNK-BASIC, and that PUNK-ZOMBIE is 60 ETH, then they are able to determine that a zombie CryptoPunk with four attributes should be about 150% of 60 ETH or 90 ETH.

With this problem refined, it will not be difficult for NFTX to delve into on-chain liquidity, enabling NFT market makers to automate their strategies, and aiming to become somewhat of a "Kyber for the NFT space."

Randomized Packs & Gift Cards:

Having a large reserve of NFTs opens up a number of possible use-cases for NFTX. One such possibility is a service offering randomized packs with varying likelihoods of different NFTs. Another possibility is gift cards. Currently, when a user redeems an NFT by burning a fund token, the NFT they receive is randomly selected.

Tokenomics

NFTX (NFTX) is an ERC-20 token issued on the Ethereum blockchain. NFTX token is the native token of the platform's NFT index funds. The NFTX token was released on January 5, 2021 at an initial price of $18.00 USD. It's initial tracking indicated a quick drop off followed by a steady rise to around $35.00, and it recorded an All-Time High of $38.04 USD on January 6, 2021, and an All-Time Low of $16.37 USD on January 5, 2021. The token total supply is 650,000 NFTX and it is currently traded mostly on Uniswap (v2).

Token Distribution

Token AllocationPercent (%)Amount (NFTX)
Vested for founder10%65, 000
NFT contributions30%195, 000
ETH contributions30%195, 000
NFTX liquidity10%65, 000
Farming20%130, 000

See Also

  • List of collectibles
  • Crypto Collectible
  • Collectible Selfies: Crypto Pioneers.
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NFTX

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