nftperp - TL;DR
0x2617
March 29th, 2022

nftperp — a perpetual futures dex for NFTs

This is not a complete explanation and small details were intentionally not included. It is primarily intended to help you understand the basic structure of nftperp.

Problems right now:

  1. There is no way to short NFTs at the moment. NFT traders can only buy low and hope to sell high. (and ape holders don’t have a way to hedge their position)
  2. Blue chip NFTs like Bored Apes and CryptoPunks are far too expensive for the retail community to get involved.

potentially, a lot speculative trading volume can be captured.

Our solution: nftperp — a perpetual futures exchange for NFTs that tracks the floor price of NFT collections.

Traders can go long or short on the floor price of projects like BAYC, with any amount in $ETH.

For example, Bob owns an ape with a floor price of 100ETH. He wants to lower his downside risk but he doesn’t want to sell his precious ape. He found out about nftperp and opened a 100ETH short position on the exchange.

If the floor price of BAYC drops to 90ETH, his ape is now worth the value of 90ETH but he can now close his short position with a 10ETH profit.
Instead of losing 10ETH with the floor price drop Bob can now hedge his position with no value lost. And if the floor price of BAYC increases to 110ETH, Bob would have a loss of 10ETH on his short position but his bored ape is now worth 10ETH more.

On the other hand, let’s say Alice is a web3 newbie and have been priced out from blue chip NFTs like bored apes. With nftperp she can long BAYC with as little as $5 USD in $ETH, with leverage (if she’s degen enough).

Ser, but how?
With perpetual futures, you don’t need real nfts as collateral. The perpetual futures contracts simply track the floor price of the underlying NFT collection. Allowing traders to come to the exchange with ETH, leave with ETH.

What mechanism is nftperp built on?
We use vAMM (virtual automated market maker) under the hood, originally designed by Perpetual Protocol.
TL;DR on vAMM:

  • no liquidity provider is needed
  • no orderbook
  • one trader’s gain is another trader’s loss

Where is the floor price feeds coming from?
We have partnered with Upshot.xyz and integrated with chainlink to bring real-time NFT price feeds on-chain for our smart contracts to use. Getting real-time floor prices is important because we use them to calculate funding payments between longs and shorts.

What are funding payments?

Funding is a way to make sure perpetuals price stay close to the real floor price in the spot market. If the price of perpetuals goes above the index price, that means there are more longs than shorts in the market. When that happens, the longs need to pay a fee to the shorts to have their positions stay opened. Vice versa, if the price of perpetuals falls under the index price, shorts will need to pay the longs to maintain their position.

Sounds fun, can I test it out?
If you like what you’re reading, please join our discord channel! We would love to invite you to be a part of our community and participate in the beta version.

join discord — https://discord.gg/m8DGMgfhMg

check out our MVP here

learn more about nftperp here

see you there, fren.

Arweave TX
9aFFzoFcWA_5yUFfIFS-71AtcYujBU2CSNBe5OAPEug
Ethereum Address
0x26176BeA6e597D234E064Cc631c79501461B8B9D
Content Digest
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