It is undeniable that NFTs have taken the world by storm. The new age of digital assets has seemed to captivate half of us, and leave the other half fuming at the supposed absurdity of it all. And to be honest, some of the hate is understandable. NFTs are relatively static in what they are, and what they can do. They currently seem stuck in the proof of concept phase. At the end of the day, most NFTs are essentially digital collectibles; not necessarily by design, but more due to the limitations of their design.
The main issue is that NFTs lack liquidity. Disposing an NFT generally requires a direct sale to a buyer on platforms like OpenSea and LooksRare, making it difficult to assign a true market value - the type of value that would allow an NFT to be used as collateral, for example. Current DeFi ecosystems in place cannot function with non-liquid assets like NFTs.
Introducing GumBall Protocol - Deep Liquid NFT marketplace.
All NFTs minted in the GumBall ecosystem (gNFTs) are capable of utilizing deep native liquidity.
- Swap for other gNFTs
- Sell your gNFT instantly
- Stake your gNFT to earn swap fees
- Sell gNFTs on third party markets
- Arbitrage gNFTs
- Borrow against gNFTs
GumBall Protocol is a novel approach to creating Liquid NFTs. Every GumBall NFT minted on the protocol is backed by a liquid asset such as ETH and a corresponding ERC20 token (Gumball Tokens or GBTs). The pricing of these GBT tokens is controlled by an AMM bonding curve, allowing each gNFT to have a true market value at all times. Each collection has its own specific GBT. Deep liquidity means gNFTs function more similarly to traditional liquid assets like tokens. This shift in NFT liquidity will be of growing importance in the near future as the integration of NFTs and DeFi applications continuous to grow in popularity.
When a user wishes to purchase a gNFT, they first deposit a liquid asset into a bonding curve and receive a GBT for that specific gNFT collection. This GBT can be sold back to the curve at any time, or used in the “GumBall Machine”. When this GBT is inserted into the machine, the user receives back a random gNFT from that collection, or chooses a gNFT that has already been returned to the machine.
When a user returns a gNFT to the machine, they recieve back a GBT minus a small burn fee. In this way, users may cycle GBTs through the GumBall Machine in search of gNFTs with higher rarity or desired traits. As users cycle the machine, the floor price of the bonding curve is increased with each GBT burn, and fees are generated.
The importance of rarity in NFTs is an emergent property of non-liquid assets. Without liquidity, an NFTs value must be determined some other way, and scarcity is one of the oldest tools for assessing value. The first iteration of the GumBall Protocol is an experiment between two worlds; a fully liquid asset with constant market value, as well as rarities and the ability to be auctioned off. This pinch point between the different ways of thinking about value is the basis for the game theory that GumBall is built on. The competing strategies present in the GumBall Ecosystem forge value for all participants. GumBall Protocol is part social experiment, part game, and part financial tool; it is a proof of concept for the paradigm shift that is the future of liquid NFTs. The goal is for GumBall Protocol to be built in a modular way, with future utilities easily expanded and integrated as the project grows. More utility and lower risk is a benefit for all users of the ecosystem.
The future of NFTs is fully liquid, and we are diving in head first.
Stay tuned for updates.