The AssetMerge Protocol
AssetMerge aims to create a liquid market for NFT assets (ERC721 & ERC1155 Tokens).
Existing NFT Markets
Current NFT marketplaces allow sellers to list items for sale at a fixed price or an auction and allow buyers to place offers on items or buy at listed prices. This is essentially the equivalent of a orderbook model for fungible markets, but less efficient because liquidity is fractured between each item in a collection. Marketplaces are great for allowing market participants to value assets but due to low liquidity trading can take a while and makes it usually impossible to open or close a position quickly at fair market prices.
NFT liquidity pool protocols, like NFTX help fix liquidity problems with marketplaces by creating pools for an NFT collection where each item is represented as an ERC20 unit and allowing these to be traded instantly on ERC20 AMM markets like Sushiswap.
NFTX is a platform for creating liquid markets for illiquid Non-Fungible Tokens (NFTs).
Users deposit their NFT into an NFTX vault and mint a fungible ERC20 token (vToken) that represents a claim on a random asset from within the vault. vTokens can also be used to redeem a specific NFT from a vault.
What NFTX does not address is price discoverability for unique assets in a collection as each ERC20 pool token is equal to any ERC721 token in the pool, essentially fixing the liquidity by disregarding the non-fungible nature of NFTs. This protocol does fix liquidity and allows NFTs to be instantly bought and sold but pricing each NFT the same effectively creates a market for a collection’s floor price.
AssetMerge combines best features of these 2 types market structures. The protocol is an automated market maker (AMM) that uses liquidity pools comprised of both an ERC20 and ERC721 asset.
Our AMM uses a pricing model based on the commonly used `x * y = k` formulae used by ERC20 AMMs like Sushiswap and Uniswap, but we take the unique nature of each non-fungible item into consideration to price each NFT uniquely based on demand as well as the general demand for the collection as a whole.
Features of AssetMerge
- Swap between any ERC20 or NFT instantly
- Provide ERC20 and NFTs as liquidity to gain exposure to both assets and earn yield
- Demand based pricing for every NFT
- Limit orders for trades
- NFT flashswaps
AssetMerge creates efficient pricing and liquid markets for NFTs, allows market exposure to NFT and ERC20 assets whilst earning yield for providing liquidity and allows flashswaps and instant swap settlements.
What else could be built on top of this protocol?
- Onchain TWAP price oracles for NFTs.
- With instant settlements against liquidity pools a lending protocol could allow NFTs to be used as collateral for a loan using TWAP from onchain data and a market to instantly liquidate a position.
- Arbitrage using flashswaps between AssetMerge pools and other protocols to create more efficient pricing over all onchain NFT markets.