Chances are, unless you’ve been living under a rock, you’ve seen the recent hype around NFTs (non-fungible tokens). Briefly summarised, NFTs are tokens that are unique and cannot be replaced with something else. Some of the biggest issues in the NFT space is fragmentation.
I’ve been requested frequently recently to publish a report on a NFT project, so, today I’d like to introduce you to an upcoming project. NFT.Tech is building the first NFT creation and trading infrastructure that enables NFT to become liquid assets, all within one marketplace. Before we dive into that, let’s first briefly explain NFTs a bit more.
Now that you know non-fugible tokens are unique, you’re probably still confused about what this exactly means, and what assets can be seen as NFTs.
Bitcoin & Ethereum are examples of fungible tokens. Say you sell your BTC or ETH, and buy some back later — you’d still own BTC / ETH. It doesn’t matter it’s not the ‘exact same’ amount or bought on a different exchange, or what so ever.
Collectibles such as art and (limited edition/unique) trading cards can act as fungible tokens. For example, take the NBA TopShot cards. Those who purchase a pack and open it, receive different cards called ‘player moments’. There is a max. number this exact player moment can be minted, each one of them has a unique ID. Say there’s 250 editions minted on-chain of a player moment, there’d be 250 unique cards on the blockchain with ID 1–250.
If I had #249 and I would sell it, the buyer would receive #249, and not suddenly #1 or #9, etc. — the ID remains unique and this helps to create scarcity among collectibles.
This same technique applies to art, for example Beeple (a well-known artist) sold one of his digital artworks for a whooping $69,346,250, with only one edition available. It’s clear that art has received more questions from the community, because, realistically — one could just right click and save the image and own the exact same artwork right?
That’s basically true, although, in many collector’s and artists their minds this is not the case and the art holds value because of its unique ID on the blockchain. Similar to holding a physical (1/1) edition of a painting.
According to NFT Tech, the size of the NFT market is soaring. Research from Nonfungible shows that the entire market capitalization of NFTs increased from roughly $40M in 2019 to over $380M by the end of 2020. This value has increased massively ever since, and continues to increase on a daily basis.
With well-known individuals and brands joining the space, it’s becoming clear NFTs are here to stay and are going to continue to see significant demand. Regardless of this increase in interest, NFT markets remain illiquid and widely fragmented — there isn’t really a marketplace that offers liquidity on NFTs and/or offers all NFTs within one marketplace. Opensea and Rarible are examples of marketplaces often used by NFT buyers and collectors, although, even these marketplaces remain illiquid at this point.
Liquid Matching Engine
NFT Tech aims to resolve this issue by launching the first liquid matching engine that can be used throughout the NFT market. This will allow for a bid-order book on NFTs, the liquidity engine can be adopted (implemented) by any existing marketplace allowing them to tap in onto the available liquidity (including Rarible and Opensea!).
Market makers that interact with the liquidity engine get incentivised through a reward program when providing liquidity. This liquidity is provided on the lowest price end possible, reducing risks and maximising potential rewards. This enables them to purchase NFTs at the lowest prices possible, and the liquidity engine can put it for sale at the average sale price on all connected/major marketplaces. Market Makers will also be able to participate in a staking program (more info to follow on this).
For users, NFT Tech will also provide a calculator — that enables users to search for any NFT to receive an estimated valuation. Reducing the risks of buying something that’s likely to result in losses for the buyer.
Creating & Collecting NFTs
The NFT Tech platform is also going to provide various benefits for artists, creators, or anyone who wants to create a non-fungible token. Through the use of the platform, users can create NFTs with the click of one button, without requiring any coding or development knowledge.
It’s going to be made very easy to then list these assets for sale. All NFTs are certified on the Ethereum blockchain, reducing the risk of getting scammed and/or buying a fake item.
All of the created and/or purchased NFTs can be showcased in a VR or digital gallery. This enables you to create custom collections, unique creations, etc. — to anyone you’d like to share this with. Further opening up unique ways to promote your NFTs.
NFTs meet DeFi
If that wasn’t convincing enough, try this! Now, if you haven’t heard about NFTs before, then you may or may not have heard about decentralized finance (DeFi). Summarised, DeFi are decentralized finance protocols enabling anyone to borrow or lend money (cryptocurrencies) through the use of collateral.
Both DeFi and NFTs have seen an increasing growth in interest:
Plenty of people take advantage of DeFi and e.g. borrow funds to hedge against declining markets. However, in the current illiquid NFT markets this is impossible — forcing NFT holders to ride the decline without having an option to sell their assets.
This issue is resolved through the liquidity engine. However, what if you didn’t have to sell your NFT while still being able to hedge against the price declines? NFT Tech wants to enable users to do this, by enabling users to borrow money by using NFTs as collateral.
Of course this comes with the risks. However, those who are able to indicate and manage their risks are going to love this. As, the borrowed funds can be used to e.g. buy more NFTs, or to simply pay off the loan at a later point while (hopefully) having made profit with the liquidity provided.
Roadmap & Backers
All of this is to be launched in phases. A full roadmap is available on NFT Tech
’s website: https://nft.tech/. Q1 & Q2 are probably most relevant for the short-term horizon:
Immediately standing out to me are:
- Development of the world’s first NFT liquidity engine (Q1)
- Beta release of the NFT liquidity engine (Q2)
- Franchise and distribution of the NFT liquidity engine globally (Q2)
These are what’s going to drive early adoption and growth, further enabling NFT Tech to get exposure and brand awareness while building out the next features.
The project got backed by various large and well-known Venture Capitals (VCs) as well as the well-known crypto incubator: DuckDao. Known to be backing recently launched & great-performing projects. And Château Crypto, a leading network of blockchain investors from Europe.
I’m pretty excited about NFT Tech, as I’ve been looking for a project that aims to bring all marketplaces together, to have one large overview and marketplace of NFTs rather than it being very fragmented.
I’m also absolutely thrilled to read about the liquidity engine, and hope to see this launch in the way I see this working. This to me is their core product which distinguishes them from competitors.
As they’re backed by DuckDao and various other VCs I picture it to be difficult to get in on their public sale. It’s not clear what this is going to look like, but I’ll participate if I’m able to.
Considering there’s currently no live MVP, I have to take into account potential and use all information publicly available. That said, I’d like to write an updated version on this report once they launch either their MVP or actual engine & marketplace.
Author: Marco van den Heuvel