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Gate.io introduces automated market maker and liquidity pool functionality

Gate.io, the global crypto exchange, has launched Automated Market Maker (AMM) and liquidity pool functionality on Gate NFT, its NFT marketplace. This allows buyers and sellers to trade NFTs instantly without having to rely on a price agreement between two parties.

At launch, Gate NFT has opened trading in four liquidity pools, including Mutant Ape Yacht Club (MAYC) and Azuki Fractional NFTs. Currently, the new USDT feature supports buying and selling NFTs in liquidity pools and creating LP.

Liquidity pools and AMM on Gate NFT

Traditional NFT marketplaces rely on both buyers and sellers to agree on prices that are often static, spending a lot of time creating or sorting individual offers. This reliance on pricing agreements between two parties is why NFTs are illiquid compared to other asset classes. This means that it is not always easy to quickly trade an NFT at its market value. With the liquidity pool, Gate.io has changed the dynamic.

AMMs are the same technology that decentralized exchanges are built on. They allow traders to buy and sell assets using liquidity pool (LP) smart contracts. Liquidity pools consist of two different assets that form their trading pair, allowing traders to instantly exchange one asset in the liquidity pool for another. Additionally, anyone can create an LP and earn on transaction fees provided they have assets to allocate to the pool.

Using liquidity pools on Gate NFT, an LP provider can create or participate in a pool consisting of NFTs from a specific collection paired with another cryptocurrency. Traders could then buy or sell within this pool, with the price being determined instantly and automatically based on a number of known parameters.

Smoother NFT trading and new earning opportunities

Gate.io introduced this new feature to make trading NFTs faster and easier for everyone involved. Liquidity pools on Gate NFT instantly match market demand with supply, providing the tools to make a particularly illiquid market more liquid.

Additionally, NFT collectors can access a new revenue stream that isn’t just from selling their pieces on the market. By contributing to or creating LPs with their NFTs, they are rewarded with fees for each purchase or sale in the pool. In addition, NFT developers can accelerate the launch of their NFT collection by making it easier to trade out the door and generate revenue in excess of royalties.

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