ArtDex: AMM for NFTs
We are used to NFT marketplaces operating as a classifieds board. Sellers post offers and buyers accept them or offer their prices. ArtDEX, however, offers NFT trading via liquidity pools.
Let’s find out how ArtDEX works, how it is better than conventional marketplaces, and what features will make life easier for artists, collectors, and flippers.
How ArtDEX Works
ArtDEX is a DEX where one can exchange NFTs for tokens using curves. It’s pretty much like SpicySwap, QuipuSwap, or Plenty, but for NFTs.
The developers, Genius Contracts, took their inspiration from SudoSwap on Ethereum. It’s quite a popular venue averaging $500,000 worth of transactions a day.
SudoSwap exchanges NFTs in liquidity pools using configurable bonding curves. It’s basically the same as in regular AMM, only instead of the formula K = X × Y it uses an exponent.
When you buy an NFT in such a pool, the price of the token increases by X% (delta) from the current price. X% is a fixed value. Suppose a liquidity provider has created a pool with 10 tez and set a delta of 20% (1,2). If Alice and Bob buy one token each, the price will first rise to 12 tez (10 × 1.2) and then to 14.4 tez (12 × 1.2).
The main advantage of trading NFTs in pools is permanent liquidity. In a regular marketplace, the user has to look for a counterparty to execute the transaction, or, in essence, to look for liquidity like it happens in a P2P marketplace. At ArtDEX, the liquidity of NFTs and tokens is permanent: you can always buy or sell something using the pool.
How to Use ArtDEX
NFT trading on ArtDEX begins with the creation of a pool. There are three types:
- NFT for tokens: the user contributes only tokens so that other people sell NFTs of the selected collection in it;
- tokens for NFTs: the user contributes only NFTs for others to buy them;
- NFT and tokens: the user contributes both types of assets so that others trade in the pool and generate trading commissions for the creator.
The pools only accept tokens from a selected collection. This is convenient in the current NFT market with popular generative collections of hundreds or thousands of tokens.
It turns out that the user can buy or sell NFTs in any of the pools for the desired collection. If there are many NFTs in the pool, they choose which one they want for the current price.
Pools can, in theory, be used as offers on regular marketplaces. If a user has a rare and really valuable token, they can create a pool specifically for selling it and set any price.
Accordingly, NFT prices for the same collection are very different if several pools are created for it.
ArtDEX released 3 test collections: TestTaco, TestBox, and TestCard. There are also a minimum of three different pools for each collection so that users can try out the functionality or create their own pool.
Another interesting thing about commissions is that, when creating trading pools, users will be able to set their own fees. In addition, they will receive income every time a trade is executed in their own pool. The commissions will be split evenly: half will go to GC native token holders, and a half to sDAO holders via ArtDEX stacking.
The beta will end with a bonus event to coincide with the launch of ArtDEX. During this event, a portion of the ArtDEX commission from GC will be sent to SalsaDAO NFT holders.
SalsaDAO’s Plans for NFTs and Sauces
Genius Contracts plans to add three features to ArtDEX to enhance the user experience:
- Collection Offers & Sweeps: instant search for the cheapest NFTs and one-click offers for the entire collection.
- Pool Management: asset deposits, unlocked tokens, and custom pricing options.
- Omni-Search: search the entire ecosystem in any Tezos market.
The team also plans to release three proprietary collections, NFTTrees, Timepieces, and Red and Green Salsa, before the release of ArtDEX in the mainnet. They will be dynamic: trees will grow, bear fruit, and look different depending on the time of year in real life. Clocks will show the actual time. And labels will mark the first step towards offering physical products from SalsaDAO. The platform has even announced plans to arrange delivery of exclusive sauces!
All funds raised from the NFT collections will be spent on auditing the project’s smart contracts.
ArtDEX is an interesting idea for Tezos’ NFT ecosystem that collectors would likely appreciate for the opportunity to buy the token they liked for a fixed price or to sell it without the need to look for a buyer for a long time. NFT creators would also enjoy it as they will be able to earn liquidity to launch a full-fledged trading pool and get their fees as if they were royalties.
Theoretically, ArtDEX can even allow one to do arbitration of NFTs against the offers on regular marketplaces. The flippers are going to love it.
If you want to help Genius Contracts in improving ArtDEX, visit the app, test it, and leave your feedback in the community’s Discord.
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