Are liquid editions next?

What are Liquid Editions?

Liquid Editions are NFTs that utilize bonding curves as an AMM mechanism to allow for NFTs to have guaranteed liquidity. With Liquid Editions, NFTs have dynamic pricing based off supply and can always be bought and sold along a curve giving early buyers upside. For an in-depth thread on liquid editions check out this thread we wrote a while back.

You may have recently seen the latest implementation of bonding curves with friends.tech. Users who join the platform are given an erc-20 token called “keys” that can be bought and sold on a quadratic bonding curve. As more people buy a token, the price increases along the curve, and if people sell the price decreases. By utilizing bonding curves, friend.tech has been able to bootstrap a network of creators and fans.

Applying this to NFTs

The same mechanic can actually be applied to non-fungible tokens. You can actually use a no-code tool made at Hypeshot to create one (plug):

Why care about Liquid Editions?

Liquid Editions allow for a few unlocks that cannot fully be realized with standard open edition/edition models:

1. Price and Supply Discovery for an NFT

2. Speculation

3. Instant Market Creation

Coming into the space, there was a narrative around buying an NFT to bet on your favorite artist. As the art or artist became more famous, the NFT value would go up in price. The same went for PFP collections. While the concept is interesting, and what made sense for a lot of people initially coming into the space, this really hasn’t played out as secondary markets tend to be illiquid.

Liquid Editions somewhat provide a solution to this. If you buy a piece of art early and there is more demand for that piece, you can stand to capture upside if you choose to do so. It also protects you against 0 liquidity on secondary markets.

Use Cases:

Below are some tangible use cases & benefits of Liquid Editions:

1. Guaranteed liquidity - Collectors always have guaranteed liquidity (at initial mint price) over a duration of time. If you decide to buy into a collection, but want out, you can always do so without worrying about rug pulls or liquidity on secondaries - this protects collectors from an NFT they purchased going to 0.

2. Continuous Markets for Memes - (similar to meme coins) an NFT can have it’s own market created that runs forever or for a fixed period of time - imagine a Pepe NFT put on a bonding curve

3. Prediction Markets - Create your own Market. Ex. Mint NFT A for Miami Heat to Win, Mint NFT B for the Nuggets to win - prices fluctuate based on demand for prediction. I can see a whole creator class being built around this on Hypeshot!

4. Token-gating / access passes on apps like Hypeshot (plug) or Warpcast - Ex. Buy NFT to get into a channel, leave channel by selling token - fees accumulated on buys & sells go to a treasury for each channel / creator.

5. Create markets around physical assets (ex crypto-native StockX) - Ex. buy & sell NFTs on a bonding curve - redeem for sneaker. This can help a merchant figure out the optimal price and supply before producing a good

6. Liquid badges/status symbols - Imagine buying an NFT that serves as a status symbol to a subreddit system and then selling it when you feel like you don’t align with the community anymore (Ex: can see this being implemented on Warpcast channels)

7. NFT as stores of value - Someone can buy an NFT, enter a community, and always decide to redeem the NFT for ETH

8. Alternative to Royalties - Markets are continuous meaning primary markets are secondary markets and creators always earn % fees on each buy & sell

How do Creators Make Money?

1. % fees on each buy & sell transaction

2. If a creator sets a finite minting period they are able to cash out after the minting period is over - this gives them the benefit of price discovery from speculation on pricing as well as the total ETH raised during the minting window

Why Now?

The concept of liquid editions has been tried in the past (briefly by us too).

I believe now is the time to bring this back for a few reasons and perhaps others do too:

Why?

1. L2 Adoption - we finally have a strong Layer 2 push thanks to Optimism, Base, and Zora. Doing this on ETH mainnet was painful as each transaction would cost ($15+)

2. Market Education - A broader understanding of what bonding curves are due to friends.tech

3. Revive the NFT Market - NFT primary prices have been moving to zero & towards patronage, which is fine (and also good for many use cases). Secondaries have also dropped significantly. However, this mechanism can re-catalyze the market to bring more people in and potentially move the market back towards higher prices

4. Royalty Issue - Opensea and other marketplaces have started to stop enforcing royalties - with this mechanism creators can get paid on each transaction forever

5. It’s Fun

So are Liquid Editions next?

Maybe, just like other NFT release types, it’s worth running the experiment and trying different ways to release things. That’s what makes crypto fun and what pushes the space forward.

Want to experiment with Liquid Editions?

You can try out liquid editions here:

We are deployed on ETH Mainnet, Base, and Optimism.

Just upload an image, video, or song, the network, select the pricing mechanism, select liquid, how long you’d like the mint to run for (or have it run forever) and some other basic information and you’re all set!

Bonding curves are fully customizable, however, note that you cannot update the pricing mechanism or time duration once the contract is deployed.

We’re working on streamlining the UX so if you have any questions you can reach out to me on twitter or telegram @ravibakhai / farcaster @ravi and I can help answer!

And check out one of the first experiments here by ChrisCoCreated:

This is one made by me (ravi) that will last forever :)

Credits:

Simon de la Rouviere was one of the earliest to experiment with bonding curves a few years ago! I hope now is the time we can finally bring it to “crypto-mainstream”