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:
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)
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
one trader’s gain is another trader’s loss
Where is the floor price feeds coming from?
We define our True Floor Price as a tamper-proof NFT price oracle with robust statistics and backed by sales between real buyers and sellers in a given NFT collection.
The overview of our True Floor Price computation method is outlined as follows:
Collecting and parsing on-chain/ off-chain NFT transaction events on top NFT marketplaces.
Determine data eligibility based on transaction event type, token IDs, and wash trade detection.
Filtering extreme outliers and probable outliers using statistical methodologies and volatility scoring.
TWAP True Floor Price
Additionally, we use NFTX liquidity pool twap’d value for certain market pairs.
Deep dive into our NFT price oracle can be found here
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 — here
check out our app here
learn more about nftperp here
see you there, fren.