Rewritten XIP#4: Boost liquidity of Punk-Basic fund with NFTX

Authors

Finesseboi, ChopChop

Glossary

  • SLP
  • Onsen
  • Impermanent Losses
  • Allocation Points

Summary

As it currently stands $Punk-Basic and other punk-based single (D1) funds do not have enough liquidity. Users would like to purchase $Punk-Basic but the slippage makes it a less than optimal solution. This proposal aims to rectify that, adding additional liquidity by creating NFTX/Single Fund pairs on SushiSwap, putting the currently inactive NFTX held by the treasury to work.

Rationale

The market currently values single funds more than combined funds. This may be the case because funds do not have enough liquidity. Adding liquidity to punk-basic will allow us to test (and most likely confirm) that single funds are a product with more demand. As it currently stands our most successful launches, such as the Hashmasks fund, came from organic growth with single funds. It is in our best interests to replicate this as much as possible and acquire liquidity from the ground up. If liquidity is increased and single funds are shown to be viable, then we will be able to move towards expanding our product (combined funds).

Effect

Opportunity

  • CryptoPunks currently have the most volume on OpenSea, by lowering the spread on Punk-Basic more users would acquire punks via NFTX versus OpenSea
  • If Punk-Basic is a success then more users will want to mint and provide liquidity with their floor punks as the opportunity cost would be higher if they don’t because of trading fees.
  • NFTX as a DAO would capture most of the trading fees.

Risk

  • By adding liquidity ourselves we may be subject to impermanent losses as the CryptoPunk floor price changes.
  • Pursuing single funds might prove to be a waste of time as adding liquidity may not be enough for demand to increase and prove PMF

Specifications

We need ~$5,297,600 of additional liquidity for a purchase, or sale, of 1 Punk-Basic to be realized with minimal slippage

  • Use the 86 Punk-Basic tokens currently in the treasury to add more liquidity to the market.
  • Add 86 Punk-Basic with the equivalent value in NFTX, based on market rates of ETH/Punk-Basic at time of listing, to create a new pool on SushiSwap: NFTX/Punk-Basic.
  • If proven successful, move forward with the same LP strategy for all current and upcoming single funds, superseding the previous liquidity allocation proposal from ChopChop.

Funding request - Yes - Implementation does not require additional funding

  • NFTX from the treasury to match the value of 86 Punk-Basic tokens upon listing.

Communication

Proposed points of discussion.

  • Single vs Combined Funds
  • NFTX as a base currency

Quorum

  • Minimum Quorum: At least 5 votes
  • Passing Threshold: More than 50% of must vote in agreement for the XIP to Pass. For changes to the NFTX contract, more than 70% must vote in agreement for the XIP to pass.
Move ahead with rewritten proposal
  • Yes
  • No

0 voters

5 Likes

I would like to specify that this comes out to an estimated 20K NFTX

I am also in agreement with the proposal!

1 Like

My 2 cents:

  • Great proposal, the more liqudity that can be provided to the fund tokens the better and has my support.

To help combat IL:

  • All LP fee’s should go back to the NFTX treasury to reduce effects of IL.
  • Work needed to incentivise the use of the NFTX/Punk-Basic pool to increase fee’s generated.

There could potentially be an opportunity to incentivise the community to help provide Sushiswap liquidity to these pools. For example, staking NFTX/Punk-Basic SLP Tokens on NFTX for NFTX rewards.

  • If the NFTX distributed in rewards is less than anticipated IL, then the treasury is better off. This could also generate extra engagement with NFTX as a whole and potentially more participation in the community.
3 Likes

Great points and 100% in supporting that to be taken further.

1 Like

Deposit PUNK to NFTX Pool.

LP to NFTX/Punk-Basic Sushi Pool

Stake NFTX/Punk-Basic SLP Tokens

This could be a great opportunity to allow people to generate revenue from their “common” or “Floor” NFTs. Could be very powerful especially across multiple pools (Hashmasks / Ethercards / Punks etc)

1 Like

Hi,

I support this proposal. If the liquidity of NFTX/Punk-Basic becomes deep enough and ultimately attracts users to deposit their NFT into PUNK and the PUNK into the Sushi Pool the NFT becomes a productive assets.

This opens a lot of opportunties since LP token can be used more and more as collateral in lending protocols. That would be a great step and bridging NFT directly in the Defi space.

I 100% support this. innovative way to unlock liquidity with our NFTX

1 Like

Agree with this approach. I realise it has taken a lot of conversations and several draft proposals but the work has been well worth it. Thank you Finesse, Chop, and State!

1 Like