GumBall Protocol- A Dive Into Deep Liquidity
GumBall Protocol is a novel approach to minting NFTs. Lets begin with a walk through of how the GumBall Ecosystem functions
1. Artists launch GumBall NFT (gNFT) collection on Gumball Protocol
2. In order to obtain a gNFT from a collection, user must first purchase an ERC20 (GumBall Token or GBT) from the collection’s bonding curve. The funds from this purchase remain in the bonding curve as liquidity.
3a. This GBT can be staked to earn fees, and additonally be borrowed against. The GBT can be sold back to the bonding curve at any time for current market price. or…
3b. This token can be inserted into the GumBall Machine for a collection and in exchange, the user may choose to either
- Mint a random gNFT from the collection
- Choose an already minted gNFT from the collection that has been returned to the contract
4. Users may hold and stake their gNFT to earn fees, and can sell their gNFT back to the gumball machine contract for another GBT from the collection at any time.
5. This GBT can once again be staked, sold back to the bonding curve for current market price, or used to redeem a different gNFT from the same collection.
6. gNFTs can be taken to platforms such as OpenSea and sold, arbitraged, etc. gNFTs bought off third party markets can be brought back to GumBall and sold or swapped at any time.
Each time a gNFT is returned to the GumBall contract, a portion of GBT in the
bonding curve is burned, raising the floor price of the curve. This is the minimum price GBTs for this collection can reach if all holders sell their tokens back (liquidate the curve).
Each time a purchase occurs on the bonding curve, the price of the collection’s GBT increases. Each time a GBT is sold back to the curve, the price decreases. This represents the current market value of gNFTs/ GumBall Tokens from this collection- the current price any gNFT from this collection can be sold for on GumBall.
GumBall is designed to drive high volume through collections and generate fees from swaps, purchases, sales and other activities. These fees are used to pay creators and holders of collections. Future utilities planned for the protocol will drive additional volume and fee generation. Deep protocol-owned liquidity means more utility for gNFTs in general and lower risk for supporters of new projects. gNFTs may also be used on other liquid NFT protocols for additional utility, arbitrage opportunities and synergy between the ecosystems. Benefits from protocols offering liquidity for existing NFTs can essentially be supercharged by using a gNFT with native liquidity. The goal of GumBall is to be the premiere launchpad in the emerging liquid NFT space and to build collaboratively with other protocols to bring the most value possible to creators and holders.
The GumBall minting process works a bit differently than other NFT platforms. While the price to mint a gNFT is always 1 GBT, the price of the GBT for each collection is dynamically controlled by a bonding curve. This means, in terms of ETH or other base currency, the price to mint a gNFT increases with each subsequent purchase, and decreases with each subsequent sale back to the curve. It is impossible to fully mint a gNFT collection, as the last GBT in the curve will have an infinite cost. Rather than minting out, a GumBall collection reaches equilibrium between price and market demand. Trading activity around this equilibrium generates ongoing revenue for creators and stakers and extends the longevity of a collections trading life.
GumBall presents an alternative method for creators to approach the NFT space. The GumBall Team brings the spirit of DeFi to the forefront of the NFT world to solve some of the most fundamental challenges of non liquid assets. If you’re as excited as we are about GumBall Protocol, follow us on twitter to be part of the journey!