Use cases for AssetMerge
AssetMerge is a trustless DeFi protocol that allows anyone to provide liquidity to the AMM or trade against the AMM.
For an overview of features on comparisons with other solutions in the market check out the last post, The AssetMerge Protocol.
A quick explanation of what AssetMerge offers is that it is an automated market maker that allows anyone to trade any fungible or non-fungible token for any other fungible or non-fungible token, instantly and without needing to wait on another person to trade with. Trades are all settled against protocol controlled liquidity pools where liquidity providers can have market exposure to a combination of an ERC20 and NFT collection whilst also earning a yield from trade fees.
Of course one of the primary and most obvious uses is trading. Providing a user experience where anyone can instantly swap their NFTs for any currency or use any currency to purchase any NFT in AssetMerge liquidity pools is something that no other existing protocol is offering. Liquidity to trade against instantly and pricing that is based of market demand for the specific item rather than solely a floor price of a NFT collection.
Liquidity providers on AssetMerge create their liquidity position by providing some currency, such as Ether, and some NFT(s) of the same value.
Participants who are bullish or want market exposure to both a NFT collection and some token should provide liquidity, their risk to provide the liquidity is rewarded by trade fees.
AssetMerge is a trust-less protocol that anyone can use, or other protocols can leverage for their own products. AssetMerge liquidity pools can serve as a complex onchain TWAP oracle for both NFT collections and even individual item prices. Other protocols can use the price feed to power derivative products or managing loan liquidations with NFT collateral. Like most other liquidity protocols assets in AssetMerge liquidity pools can also be used in flash loans or flash swaps without needing to provide any collateral.
When providing liquidity to an AssetMerge liquidity pool, you are taking on potential risk from market exposure to both assets in the pool. Utilizing existing NFT tokenisation protocols, such as NFTX. It would be possible to create a pool paired with an NFT collection, and a NFTX Vault token representing the same collection. This would end up offering liquidity in just the NFT collection, part of it being worth the floor price and the other part being individual items of higher market value.