Greetings Chiefs!
The last time we met we talked about how there is a potential bull run coming after the mint of y00ts, and we saw a hike in the volume of Magic Eden and a lot of mints did pretty well with one of them being Ukiyo and sharkyfi which clocked great volume in the secondary marketplace.
Now we are meeting again, and just like this time, there is a potential meta-cooking behind the scenes which might change the way we trade NFTs forever.
If you have been active in the space this last week, you must have heard the debate of how royalties of projects should be lowered and that those who are choosing to sell their NFTs in 0% royalties marketplaces are robbing the creators.
What if I told you that this new AMM model will solve this problem as well?
I can see some of you getting confused, as to where this AMM word comes from and what it means.
AMM stands for Automated Market Maker, a concept which has been taken from defi space which is much more of a decentralised approach as opposed to the order book concept of the centralised marketplaces. In simple words, it is a liquidity pool of the NFTs and a token like $SOL allowing you to swap anything anytime. If you want to see an actual working model of it you can check SUDOSWAP.
So what does elixir brings to the table as an automated market maker?
Instant Selling
Imagine you want to sell your NFT urgently as you are short on liquidity, normally you would go to a marketplace and undercut your NFT on the floor so that it gets sold quickly, but here as well you have to wait till the volume kicks in and it gets sold.
In AMM, you can instantly sell your NFT at a set price without experiencing the hassle of listing or undercutting it.
The way it works is that on the other hand, someone has put a buying pool of a certain NFT at a certain price at which he/she has already distributed the desired $SOL and since you are the one who wants to sell your NFT you can swap your NFT with $SOL in that pool.
Dollar Cost Averaging
Imagine you want to buy NFTs of a particular project, but as per your analysis, you can see the floor going down so you want to DCA your purchases as per the price moving down. Using an AMM will allow you to purchase NFTs with a delta. Which will reduce your bids by a certain figure which is being set up by you.
For example, let’s say you want to buy multiple Taiyo Robotics and you want to DCA your buying price. What you can do is open your buying liquidity pool let’s say at 100 $SOL with a delta coefficient of 5 $SOL.
What this will do is, as soon as someone comes there to sell his/her Taiyo Robotics for 100 $SOL, your order will get executed and you will own 1 TR. But now your bid price will automatically come down to 95 $SOL. And now with the next purchase at 95 $SOL, the bidding price will come down to 90 $SOL.
You can set the same liquidity pool for selling your NFTs on the way up which will allow you to sell your NFTs at a higher price after each sale without needing to list them manually.
Fees
Now comes the most important topic for those who buy and sell NFTs as a trader and not as long-term investors. Using AMMs like Elixir will always assure you of a better price at the time of selling your NFTs as the royalties or the marketplace won’t be as high as the usual 8–12% we see every day.
But won’t this be bad for creators?
Actually no it won’t. Because the projects now have the option to create their combined pool of both buying and selling by depositing both NFTs and $SOL in it and thereby earning a share in every sale that happened in that pool.
Also, if you are a big holder in a particular project, you can become a market maker by opening your pool and thereby earning a good income.
Now, these are all the benefits which will be made available to all the users irrespective of the fact that they own an Elixir NFT.
However, there are some things in the bag:
Borrowing/Lending
Elixir holders will be given an option to borrow and lend their NFTs that they don’t want to buy or sell immediately.
Now you may ask why one would need to rent an NFT. There are different use cases:
1. Play to Earn Games had their meta in this space and the successful ones had a floor that was out of the newcomers’ reach. Now, there might be holders of the project who are not interested in playing the game, and the NFT is just sitting in their wallets. Renting their NFTs will open revenue streams to themselves, small players who want to play and earn and the creators.
2. DAO Access: Some holders hold a large number of NFTs in a particular project which they don’t want to sell. However, they need only one NFT to get access to that DAO. The rest of the NFTs are sitting idle in their wallets which they can rent and earn a fee on.
3. New Comers/New players in the market will have an opportunity to explore the ins and outs of the prestigious DAOs in the space to learn and grow better all while paying a small fee.
Long/Short
This particular option is highlighted on the official website of elixir. It’s not computer science to understand what long/short means and from the looks of it we can imagine that elixir might be bringing something which has been asked a lot of times in this space for a long time.
Collection
There are going to be 2 official collections of Elixir
- The Nectar (Supply — 777)
- The PFP (Supply — 10000)
Nectar holders will be granted Multiple PFPs from the 10k collection + a 1:1 Legendary unrevealed PFP which will accrue more benefits than a normal PFP collection.
In order to receive these NFTs, nectar holders will have to stake their NFTs in the Factory, those who will never unstake their NFTs will receive an additional bonus allocation of PFPs.
After Nectar has received its guaranteed allocation, it will need to be burned.
To conclude, I would only say one thing, a Decentralised Marketplace is the future of NFTs in Solana. It has happened in Ethereum long before and we can see how successful it got. The time has come we can see the same development in Solana as the no. of active users is by far the most in any other L1.
Also as expected the Nectar collection did extremely well in the secondary marketplace, so make sure you get yourself covered with a whitelist for the mint of the PFP collection.
As always DYOR
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