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dear bankless nation,
The rise of Bored Apes and CryptoPunks brought plenty of wealth to avid collectors. NFTs are now a multi-billion dollar asset class.
The problem is that getting liquidity for your NFT is a tough decision.
It’s an all-or-nothing proposition. Either you sell it or you don’t. There is no luxury in slowly trimming or hedging your position like there is with fungible tokens.
Is there a solution?
Sudoswap is an option. The protocol uses the sudoAMMuse of a binding curve to allow superior flexibility in buying and selling NFTs.
And the platform has been in the spotlight over the past few weeks as collectors have flocked to the market to tap into that much-needed liquidity.
With that, Sudoswap has also sparked some controversy over creator royalties as the platform allows collectors to avoid them entirely.
Would you like to find out more?
William has you covered.
-Bankless team
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Unbanked Author: William M PeasterBankless contributor and metaversal writer
Graphic by Logan Craig
Sudoswap is a new NFT AMM that goes where no NFT marketplace has gone before. It implements innovative liquidity pools and commitment curves to bring much-needed liquidity to an emerging multi-billion dollar asset class.
This bankless tactic shows you how to open your own NFT liquidity pool in this emerging market.
Started in April 2021 by 0xmonsSudoswap started out as an over-the-counter (OTC) NFT trading dapp.
A few months after launch, 0xmons began developing a new NFT Automated Market Maker (AMM) system, also known as SudoAMM.
Where other NFT-AMMs like NFTX rely solely on liquidity pools, sudoAMM is specifically designed to add bond curve features into its liquidity pools to offer superior flexibility in both buying and selling NFTs.
The creators of SudoAMM introduced the technology on July 8th, 2022 as the new engine of the SudoAMM decentralized marketplace. Since then, trading volume on the chain has skyrocketed as people flocked to see the project’s unprecedented lock-curve opportunities and gas-efficient transactions.
Previous volume of sudoAMM – Dune Dashboard from 0xRob
In general, Sudoswap is in the same order of magnitude as NFTX as it is a protocol that also allows for optimized trading around “floor” NFTs.
However, a router system that works across multiple uniquely parameterized liquidity pools and customizable commitment curves are Sudoswap’s key starting points NFTX.
This means users can set up Buy Only, Sell Only, or Buy.and– Sell NFT pools according to predictable price targets. For example, 0xmons explained in a previous blog post via sudoAMM:
“For liquidity providers, unilateral pools allow entering or exiting a large NFT position on a DCA basis. For example, a buy-side pool buying its first NFT for 10 ETH, then 9 ETH, then 8 ETH, etc. (assuming a linearly decreasing commitment curve). Or a sell-side pool selling its first NFT for 1 ETH, then 1.5 ETH, then 2.25 ETH, etc.”
A big talking point in the NFT ecosystem lately has been Sudoswap’s approach, or rather its lack of, honoring NFT royalties.
In fact, one of the main selling points of sudoAMM was that its merchants do not have to pay any license fees compared to using other NFT marketplaces. This saves the collector around 5-10% on each purchase.
To understand why this dynamic is controversial, one has to go back to 2020, as a group of now legendary crypto artists challenged and won At least 10% second sale fees on all NFT resales from popular NFT marketplaces.
Since then, 10% royalties have become a de facto standard for crypto artists on their pieces, and are widely hailed in the NFT space as a Web3 rejection of the historical status quo that artists typically never received any Second sale fees when reselling their works.
Accordingly, there is a very strong pro-royalty culture among much of the old guard in the NFT ecosystem, and many in this camp see the descent towards zero royalty to Sudoswap as a backslider, exploitative and a red line not to be crossed.
On the other end of the spectrum, you have more cynical views on how this race towards zero royalties is all but inevitable, love it or hate it, as exemplified by this recent Udi Wertheimer tweet:
Then there are those in the middle who say that Sudoswap is primarily suited to offering liquidity flexibility around large PFP collections, quite a few of whom have already experimented with their royalty approaches.
For example, two of the three most traded projects so far have been on Sudoswap Based on ghouls and 8 links. The Based Ghouls team set up their own Sudoswap liquidity pool to control their liquidity, while 8liens charges a 0% royalty for strategic reasons.
For these kind of projects Sudoswap makes a lot of sense in my opinion.
Anyway, NFT aggregators like Gem are adding opt-in royalties for Sudoswap transactions, so soon it will be possible to trade on Sudoswap and also pay royalties.
I write Bankless metaversal NFT column, and lately I’ve been focusing on DIY solutions like How To Create your own PFP collectionhow one Build your own Minting UIand how Create a minting allow list.
With that in mind, let’s assume you’ve coined your own NFT collection and are now ready to open it to the world. How to create your own NFT liquidity pool on Sudoswap:
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Go to Sudoswap.xyz
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Connect your wallet
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Click the Your Pools tab and then click the +Create Pool button. You will get to this interface:
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Click the Sell NFTs for Tokens button or the Do Both and Earn Trading Fees button. In this example, we take the first route and choose to sell NFTs for ETH only.
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Select the NFT collection you want to deposit from and the token you want to receive in exchange (only ETH is possible for the time being), then click the Next Step button.
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At this stage, you can set up your NFT’s price point, its binding curve type, and the delta by which its price changes on new transactions. Click the Next Step button again.
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On the following page, click the “Choose your NFTs+” button and go through and select the NFTs you wish to deposit as follows:
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Next, start an approval transaction to allow Sudoswap to access your NFTs, and then escrow your NFTs with a final transaction. Next, you will be taken to your personal pool dashboard UI, which looks like this:
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To manage your wealth and track your sales, simply click the “Your Pools” button on Sudoswap to go to your liquidity pool’s command hub:
Surely Sudoswap is not suitable for every NFT project.
However, it may be right for you.
If you’re interested in experimenting with this NFT AMM, start small, but whatever you do, don’t fall asleep on the possibilities of Sudoswap’s binding curve.
This technology alone makes Sudoswap an incredibly interesting DIY liquidity application for one of the fastest growing sectors of the crypto economy.
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No financial or tax advice. This newsletter is for educational purposes only and is not investment advice or a solicitation to buy or sell any assets or make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.
disclosure. From time to time I may include links to products I use in this newsletter. I may receive a commission if you make a purchase through one of these links. Additionally, the bankless scribes hold crypto assets. See ours Investment information here.
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