[Proposal] Nftfy Nest - Boost liquidity to new ERC20's (Shares backed by NFTs)

Nftfy - NFT Securitizer

nftfy.eth

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Balancer Grants Submission

Nftfy Nest - An environment to boost the liquidity of new tokens, powered by Balancer and Nftfy.

Nftfy is a decentralized securitization protocol that allows anyone to create ERC20 compliant Shares backed by NFTs. This means that many new ERC20 tokens will be created.

Therefore, there was a need to create a curation process and an environment to boost liquidity, in order to develop a tokenomics to properly stimulate the launching of new tokens. This environment is named Nftfy Nest, and its tokenomics is entirely developed within Balancer Protocol. To completely understand, we recommend reading the White Paper and following Nftfy on Medium and on the Discord community.

In this document, it is presented a summary of the following topics.

1. Nftfy Protocol
2. Tokenomics
  2.1 Important Concepts
     i. Nftfy Nest
    ii. NFY Token
   iii. NFY Distribution
  2.2 Complete Tokenomics Explanation
  2.3 Other Features 
3. Proposal
4. Nftfy Team
5. Nftfy official

1. The Nftfy Protocol

Generally speaking, securitization is a parasocial procedure related to the creation of securities backed by an asset, right, and/or liability. It divides the ownership of an asset with numerous other parties, being necessary to establish rules that will manage the shareholders’ individual interests. Usually, these rules are described in a contract commonly known as Shareholders’ Agreement, and it has clauses that approach numerous possible scenarios. The securitization process is centralized and will always be when related to real-world assets. However, once this concept is brought within Blockchain domains, more specifically in regard to Non-Fungible Tokens (NFTs), it can be developed in a totally decentralized manner.

In Nftfy, the backing mechanism is entirely decentralized and software-guaranteed, without the necessity of any intermediary such as regulators, auditors, or compliance. Employing the methodology Lex Cryptographia, Nftfy brings legal contractual elements and adapts them into code through Smart Contracts, making them inviolable and robust, and guaranteeing all the user’s rights in a highly simplified way. As a major component in the Shareholders’ Agreement, a simple exit rule is defined, in which it conducts the way the parties should proceed to reverse the securitization process. It is directly within this rule that the Nftfy Protocol works, and all the concepts involved can be found in detail in the article “The decentralized securitization”.

Nftfy executes this procedure in a simple manner. Basically, the protocol certifies two issues:

  • The Shares must be backed by the NFTs;
  • The rights of the parties involved (Shareholders) must be preserved.

Nftfy protocol simply guarantees this in three steps:

Securitization - Redeem - Claim

1.1 Securitization

Stake your NFT and generate ERC20 compliant Shares. Then, set an Exit Price, which is the maximum price that anyone needs to pay to Redeem the NFT back from the stake.

Example:
Creation of 1.000.000 Shares
Exit Price at 2.000.000 DAI

1.2 Redeem

Any user who wants to withdraw the NFT can interact with the contract by paying the Exit Price. This payment can be done using Shares and the cryptocurrency set on the Exit Price.

Payment Example:

30% in Shares → 300.000 Shares
70% in coin → 1.400.000 DAI

The payment made in cryptocurrency - in this case, DAI - is staked in a contract Vault and can be Claimed by the other token holders.

1.3 Claim

The Shareholders who have the remaining Shares can Claim their rights by exchanging their Shares with the proportional amount of coins in the Vault.

Example:

Shareholder 1: 10% of shares (100.000 Shares) → Exchange for 200.000 DAI
Shareholder 2: 5% of Shares (50.000 Shares) → Exchange for 100.000 DAI

You can see more about all the three processes in our article on Medium “Nftfy User’s Guide” and in the following figure.

[ See in the official document ]

Figure 1 - Schematic Diagram of the three processes in Nftfy

2. Nftfy Tokenomics

Considering that, from now on, anyone can create a variety of new ERC20 tokens, as discussed on Exponential Framework on DeFi, the number of ERC20 creations will rise too quickly. Therefore, the Nftfy Tokenomics needs to:

  1. Help these new tokens (ERC20 compliant Shares) to raise a minimum tradable liquidity;
  2. Protect the market against malicious agents;
  3. Build a strong and evolved community.

2.1 Important concepts

We explain the tokenomics and how it is integrated with Balancer Protocol, also, the topics of Nftfy Nest, NFY Token and NFY Distribution will be introduced below.

2.1.1 Nftfy Nest

Nftfy Nest is an environment of Liquidity Bootstrapping Pools. The LBPs are selected through a decentralized curation process that:

  1. Analyses the proportion of total Shares on the LBP;
  2. Analyses the market capitalization based on the NFY token as reference;
  3. Stakes the BPT as proof of liquidity;
  4. Classifies the NFT;

2.1.2 NFY Token

Nftfy Protocol has its own Governance Token: the NFY. It has some important attributions, such as:

  1. Act as shares collateral on the LBPs;
  2. Boost the environment of new ERC20 Contracts through Liquidity Mining;
  3. Provide governance power to token holders (curation and management)

It also has secondary attributions, like:

  1. Funding the development of NFT Ecosystem;
  2. Funding new composability features on DeFi Money Legos;
  3. Reward token holders.

2.1.3 NFY Distribution

Inspired by different benchmarks and developed to create a long-lasting and powerful protocol, the NFY tokens are going to be distributed over the next six years. The distribution of the majority of the tokens (65%) is presented below:

  • Liquidity Mining (20%): to boost liquidity of new Shares on Balancer Pools.
  • Initial Liquidity (5%): to foster securitization and boost the community.
  • DAO Treasury (40%): The DAO will assume the responsibility of managing this amount of tokens and it will have the power to decide whatever is the best option for the protocol.

The other 35% of the tokens are reserved for the Nftfy Team, investors, partnerships, marketing, and vesting mechanisms.

2.2 Complete Tokenomics Explanation

Nftfy tokenomics is designed to deliver to the open market the maximum of good Shares with liquidity. The following figure shows the schematic diagram of its tokenomics.

[ see in the official document ]

Figure 2 - Tokenomics schematic diagram.

As Nftfy Tokenomics uses Balancer Protocol and there are many ERC20 tokens to boost, a mechanism was created to use NFY as collateral to compose the LBPs.

Figure 3 - Nftfy Nest environment with Liquidity Bootstrapping Pools using Shares and NFY tokens.

The Balancer protocol provides the technologies that allow building this tokenomics structure. Beyond the Pools and the Smart Pools, technologies such as Smart Order Routing (SOR) and Multi-Path Route would be also very useful for the protocol.

This tokenomics is supported by two value proposals:

  1. The community provides liquidity through the NFY token, counterbalancing strong assets, especially DAI and WETH.
  2. The market value of each NFT is counterbalanced in pools with NFY.

A new version of the tokenomics is being developed, in which improvements have been proposed, such as:

  • Scheme of rewards and token burning;
  • Token accumulation procedures;
  • Shares negotiation by the DAO to provide liquidity;
  • Accumulating process of high potential Shares by the DAO.

These value proposals strengthen Nftfy’s community and allow the administration of Tokenomics’ business model. Therefore, the community can work on many fronts to improve the utility of the NFY and to bring liquidity to it. Some examples include the management of the Impermanent Loss, by choosing the pool that best fits their portfolio allocation, and the reduction of the Slippage to negotiate Shares. Furthermore, the community will benefit from a six-year liquidity mining process.

2.3 Other Features

A difficulty that a token issuer goes through is to create a users’ base for the newly created Shares. Also, the NFY holders are the most interested community in participating in this kind of initiative. Therefore, any token issuer can make airdrops to Liquidity Providers on Nftfy Nest pools, and all the community continues to benefit constantly for a long time. This process provides a complete mechanism of Shares offering and it has the following features:

  • Airdrops to an interested community
  • Liquidity providers
  • Proof of Liquidity
  • Liquidity Mining
  • Governance power

3. Proposal

Nftfy Protocol is requesting support on the following topics:

  • Marketing

    • Associate Balancer’s brand as a supporter of the Nftfy Protocol.
    • Promotion of Nftfy Protocol by the Balancer Community.
  • NFY Whitelist

    • List NFY as valid to receive BAL in pools. (When appropriate)
  • Balancer investment

    • 1,000 liquid BAL.
    • 4,000 BAL to compose the LBP BAL/NFY in the 80/20 proportion.
    • Proof-of-liquidity for 6 years with the BPTs of this pool.
    • Pool 0x2ddd5425a2c78ceb168d52a65fda21600a03035f
  • BAL Community Support

    • Boost Nftfy community at the beginning by:
      • Joining our Discord Group
      • Using Nftfy protocol
      • Buying Shares
      • Launching your own Security Dex Offerings (SDOs)

In this regard, Nftfy promotes other different ways to use Balancer protocol, providing important contributions, such as:

  • New tokens offerings and Liquidity Mining, which stimulate the use of Balancer Protocol;
  • Nftfy Nest, a full ecosystem to launch liquid Shares;
  • Simplified UX to structure an IPO;
  • Degen IPOs (Nftfy Nest + Balancer);
  • Degen LBPs;
  • Degen Airdrops;
  • Degen Securities (Nftfy Protocol);
  • The constant development of technologies and structures that facilitate the integration of new users, in order to boost liquidity for newly created tokens.

Team

Leonardo Carvalho

Creator and architect of the Nftfy solution. Electronic Engineer, Belong to the BlockchainBH Community, an association responsible to teach and popularize Blockchain to the Brazilian Community. Was co-founder and CEO of Cryptonita Social Trading startup for two years, and it was there that he learned about the legal rules (Shareholders’ Agreement) that the Nftfy Protocol is based on.

Rodrigo Ferreira

Ph.D., Yale, Computer Science
Blockchain Architect, Toptal Freelancer, Smart Contracts Specialist,
Creator of the wallet Cashu with support of more than 30 Cryptocurrencies

André Salles

Lawyer, Member of BlockchainBH Community an association responsible to teach and popularize Blockchain to the Brazilian Community.
MBA Professor of Blockchain and Cryptoeconomics.

FabrĂ­cio Miranda

Solutions Architect, Team Lead with 12 years in Software Development
Experience with DeFi Applications and Crypto Exchange

VinĂ­cius Vasconcelos

Master in Electrical Engineer, Product manager, Public relations
Blockchain and DeFi enthusiast, Tokenomics designer.

Escola Cripto

Lalo Trage, Cláudio Trage and João Hazim
One of the main content sharing companies in Portuguese for the crypto market - approximately 20 thousand followers. The founders developed their own methodology for fundamental analysis of crypto projects and since then have been mentors and consultants for investment groups.

Nftfy Official

Twitter: @nftfysec
LinkedIn:
Discord:
Medium:
Github:
NFY Official: 0xc633baf9fde99800226c74328024525192294d2b
Presentation:
Live Demo (Rinkeby):

Links available in the comments

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Nftfy Official

Twitter: https://twitter.com/nftfysec
LinkedIn: https://www.linkedin.com/company/nftfy
Discord: https://discord.gg/tE4xxFH
Medium: https://medium.com/nftfy
Github: https://github.com/nftfy/nftfy.github.io
NFY Official: 0xc633baf9fde99800226c74328024525192294d2b
Presentation: https://youtu.be/PolOtLnMLb4
Live Demo (Rinkeby): https://youtu.be/UOjamMeqq_4

3 Likes

There’s a lot of details here which is nice.

The main question I would have about this is who will use this and why? Do you already have users who are super interested in this? Also why does it have to be an NFT and not just a regular ERC20 token?

3 Likes

Hey! Thank you for the question.
Considering the scenario of the Decentralized Finance, in which many financial services are offered, the Nftfy protocol offers the service of the decentralized securitization. In general, the main problem we try to solve is the low liquidity of the NFT market and the subjective price of these assets.
In that way, Nftfy provides the securitization of the NFTs, dividing them into Shares ERC20-compliant. In other words, the protocol generates ERC20 tokens fully backed by the NFTs (ERC721). After that, the user can create Liquidity Bootstrapping Pools in Balancer Protocol to generate a market with some liquidity for the Shares.
The main groups of users are:

  • digital artists, who often face difficulty in pricing and selling their art pieces;
  • collectors, who don’t know if they are paying a fair price for the NFTs;
  • speculators, who most of the time prefer not to enter in this market;
  • NFT and Game platforms, that has items with low liquidity;
  • Real-World Assets, that once it is properly regulated, Nftfy will certainly have a great contribution in this topic.

There are numerous projects trying to connect DeFi and NFTs ecosystems, but they keep struggling with low liquidity. Also, there were some protocols with the idea of dividing the NFTs, but they couldn’t achieve a way to perform that in a decentralized manner. Nftfy is the perfect connection between DeFI and NFT, and it allows the transaction among states of non-fungibility and fungibility in a totally decentralized way.
Until now, the protocol has been used for three digital artists, with a total of four art pieces securitized.

3 Likes

Someone who wants to launch a regular ERC20 project could join our tokenomics symply providing liquidity in a LP on Balancer that contains NFY.

3 Likes

So under this you’re asking for ~70K. What does the proof of liquidity for 6 years mean?

How is this different to the platforms that currently exist? There are any number like Rarible, Opensea, InfiNFT, Mintbase, Cargo etc etc

How is this going to be better and why will users use this over the ones above?

My biggest concern around this is that it’s asking for a LOT from Balancer without any reciprocation (or at least not that I can see - again happy to be wrong here).

2 Likes

Hi Tongnk! Thanks for your questions, we have the pleasure in answer them.

How is this different to the platforms that currently exist? There are any number like Rarible, Opensea, InfiNFT, Mintbase, Cargo etc etc

How is this going to be better and why will users use this over the ones above?

The big difference here is that we SECURITIZE non-fungible tokens into fungible tokens that can be traded, in shares, once they have liquidity pools added here in balancer. That way we want to incentivize liquidity for a low liquidity segment.

For speculators:

What really happens today with people that want to speculate and trade NFTs is that they do not have enough liquidity. You buy one piece today, set your resell price, and pray for someone to buy it more expensive from you. And the price is totally subjective. Just look at any OpenSea price chart for any NFT, you will see that there is no liquidity at all, hence people lose interest in invest/speculate.

With NFTFY we pretend to solve those two pains, liquidity and price.

Liquidity:

Anyone will be able to buy/sell nft shares from pools containing NFY and Shares.

Price:

Each securitized NFT has an EXIT PRICE that anyone who wants to take that NFT for himself, will need to pay that exit price, no matter if they have shares or not.

That way the securitizer puts an objective price on the NFT and people can trade its shares on the secondary market (pools) until there is a redeem (exit price).

For the community:

Our tokenomics aims to empower our community via our NFY token. Those that participate in adding liquidity to the protocol will be eligible for the liquidity mining and airdropped NFT shares, hence every curated pool will need to airdrop for the NFY community at least 1% of the nft shares. That will create a natural demand for the token.

For the artists:

We are building a powerful marketing tool here for the artist, since they will be able to airdrop nft shares for our community, spreading their work much wider. We cant disclose much about this yet but we are focused in creating manners for the artist engage directly with the ecosystem.

Liquidity is also a big problem for artists, once they launch an auction for their nfts and it can take a lot of time to find a bit of hist interest and that type of launching is exclusive for rich people to participate, hence the bid prices can get very high depending on the artist. By securitizing his NFT, otherwise is much more inclusive since anyone can buy few shares of that art, bringing much more liquidity into the nft ecosystem.

And I am talking about artists because is the target we will aim on our initial phase, but it could be anyone, since our protocol is open and decentralized for anyone who wants to securitize any nft, no matter what that nft represents. In the future we see even real world things being securited with our protocol, but we know we are yet a bit far from that reality.

At last but not least, we don’t have the intention on be competitors with Rarible, Opensea or any other protocol, we believe that we can all work together to bring more liquidity and create a solid market around NFTs.

I hope I have answered some of your doubts and I am glad in discuss it forward.

3 Likes

Since we’ve got to know and understand the variety of usages of Balancer Protocol (specifically since April/2020), we got astonished by how well this protocol fits with our earlier idealized Securitization Protocol.

Some of the main functionalities are:

  • pools that benefits purchase with low slippage
  • pools that protect against dumps
  • protect minority token holders, guaranteeing liquidity
  • manage investment portfolio in a way never thought before - Markowitz would love this
  • automated swing trade through manipulating (setting) high fees
  • manage the desirable impermanent loss
  • define strategic fees
  • token distribution through LBP
  • price sensor
  • immediate and infinity liquidity
  • collaborative liquidity provision
  • Smart pools
  • intern rebalancings pools through technologies like Multi-Path Route and Smart Order Routing

By understanding these usages and tools, Nftfy Tokenomics was developed directly related with Balancer protocol. It is designed to boost initial liquidity to newly created Shares (ERC20 Tokens) through Balancer, and It is composed of two types of pools: Main Pools and Liquidity Bootstrapping Pools

The Main Pools are those with NFY and high liquid tokens, such as DAI, WETH, WBTC, and BAL. These pools have a very important role of being the liquidity channel to the Shares and to sustain the global liquidity of Nftfy Tokenomics.

The Liquidity Bootstrapping Pools contain NFY and Shares. We call them as LBPs due to their function of providing initial liquidity to the Shares. It doesn’t mean they are smart pools; they can be simply Liquidity Pools.

Therefore, we are requesting these 4,000 BAL to provide liquidity and to support Nftfy Tokenomics. The Proof-of-Liquidity for 6 years means that we’re time-locking these BPTs. In that way, we guarantee that we won’t spend these BAL on the market. We also have a fair six-year token distribution, which confirms our long-term vision.

About the other NFT platforms you mentioned, Nftfy is inserted in a different scenario. The users need those platforms to mint their NFTs. Then, they can securitize and generate Shares in our protocol. In that way, Nftfy acts as a connection between DeFi and NFT ecosystems.

In terms of reciprocation, we are offering another possibility of improving the usability of Balancer protocol. Everyone who uses Nftfy and wants to generate initial liquidity to the Shares will create pools on Balancer, in addition to constant open source software implementations, which we will do on top of the Balancer protocol, in order to optimize usability for these new cases.
Besides that, we have the intention to offer airdrops of NFY tokens for the Balancer community.

3 Likes

hey @nftfyleo and @lalotrage! thank you for this awesome proposal.

you guys have illustrated a forward-thinking vision that i think can bring value as a bridge between NFTs and the DeFi ecosystem, as well as bringing new liquidity onto the Balancer protocol.

i have some questions/comments on some details of your proposal:

  1. you’ve requested a total of 5K BAL, which is quite a high amount of funding and appears to be over the budget we would be able to allocate, with respect to our overall goals for this batch of grants. how did you arrive at this number? if you believe this project truly requires ~$75,000- $100,000 USD of investment in order to launch, please provide a detailed explanation of why. otherwise if you can build this with less capital, please lay out how you would achieve this and what your revised funding requirements would be. please bear in mind that Ecosystem Fund grants are intended to cover the cost to build.

  2. what exactly will you build and ship for this grant project? can you please share a detailed product roadmap for this project, showing a timeline of what you will build, how long it will take, and who will be responsible for each step? here is a GANTT template that you can use (please make a copy of the file so that you can customize it).

  3. regarding the marketing support you’ve requested-- as you are building this project on the balancer protocol, we would be fine with you promoting this fact and portraying a technological partnership between NFTFY and Balancer. The Balancer Labs team does not engage in marketing or promoting projects.

  4. whitelisting- we have a standard whitelisting process for BAL rewards and you would just need to follow the instructions to complete that process. the NFY token would be held to the same standards and requirements as all other tokens; there would not be special treatment granted.

  5. regarding the community support you’ve requested-- this is up to the community! we don’t control what the community does (nor do we ever want to) and we don’t make promises on behalf of the community. however we would welcome you to share your project with the community, explain how it is beneficial to the Balancer ecosystem, and see if they are willing to engage.

1 Like

Hello @immutbl

We are glad that you liked Nftfy protocol. Thank you for the comments and for the questions.

We believe that Nftfy has some other aspects to offer in its value proposition, apart from the code development, bringing important benefits to Balancer Protocol and community. Considering that, a more detailed explanation of the value proposition is described below.

1. Open-source code and collaborative development

a) UX/UI integrations and widgets to connect Balancer Protocol to other platforms

  • Token Swap

Nftfy Team is developing a widget to allow the token swap inside Nftfy Marketplace. Initially, this widget is only going to establish a direct connection in the Marketplace (Feb/21). Further, the widget will be available in a generic code to be used in different platforms (Apr/21).

  • Pools Management

Another feature proposed is a Pool Management Tool to allow the user a better experience in configuring the LBP. There will be a direct connection to Nftfy Marketplace (May/21), and a generic widget will be available later (Jun/21).

  • Standart LBP creation process

As part of our concern with the UI/UX, it is in development a tool to allow the creation and management of standart LBPs with just few clicks (May/21)

  • Liquidity mining algorithm with time-locked weights

Development of smart contracts to stake the LBPs for Proof-of-Liquidity, and allowing the user to participate in a Liquidity Mining and Rewards process pondered by time-lock weights (Mar/21).

b) Analytics tools using Balancer Protocol

Some examples of tools and product applications to be implemented are:

  • Assets Price Charts (May/21)
  • Assets ranking by liquidity: price impact on the buy and sell processes (Jun/21)
  • Assets ranking by trade volume (Jun/21)

2. Liquidity provision to new assets

a) Liquidity to run the tokenomics (Feb/21)

In order to foster the Shares trading in Nftfy Protocol, a Marketplace is in development, and the first version is due soon. Meanwhile, the protocol must raise initial liquidity to build the Main Pools. The Main Pools are the core of Nftfy Tokenomics, being responsible for maintaining the protocol running perfectly with minimum liquidity.

b) Tokenomics improvements (Mar/21)

Some improvements in the Tokenomics were proposed and all the updates will be implemented soon, such as: Liquidity Mining, Rewards, Airdrops, Fees Management. (Everything related to the use of Balancer)

3. Popularization of the LBPs creation process

We generalized one of the most exclusive use cases of Balancer protocol, which is the creation of Liquidity Bootstrapping Pools. Soon we will be experiencing a major growth in the amount of users creating LBPs. The interesting thing is that these users don’t need to be specialist project developers, as any user will be able to create an LBP and provide/boost liquidity to the new ERC20 tokens that they are launching. Thus, Nftfy will foster an increasing demand on the utilization of this kind of service, which leads to a high demand for innovation and improvements in the area of initial token offering, such as the one proposed by the team PrimeDAO who has been recently awarded with the grant.

In summary, Nftfy Team is currently working on the development and implementation of the Nftfy Marketplace. The first version will be ready in February 2021 with some of the most important functionalities.

Fund Request:

The Nftfy Tokenomics was designed to provide and boost liquidity to the Shares (ERC20 compliant) created in the protocol, and it is completely integrated on Balancer protocol. In order to maintain the Tokenomics running perfectly and with enough liquidity for the whole ecosystem, we are going to create the Main Pools, which are pools composed of NFY and other high-liquid tokens, such as DAI, ETH, WBTC, and BAL. These pools have a very important role of being the liquidity channel to the Shares and to sustain the global liquidity of Nftfy Tokenomics. Therefore, the 4,000 BAL we are requesting will be directly used in the composition of one of the Main Pools. In fact, it will be our first Main Pool created to sustain the Tokenomics.

As mentioned above, we are going to make the Proof-of-Liquidity of the BPTs for 6 years, in a manner to guarantee that we don’t have any intention of spending these BALs for other purposes. Therefore, this is an important amount to the initial development of Nftfy Tokenomics.

The remaining 1,000 BAL will be used to cover development costs over the months with the activities described in the roadmap.

Therefore, considering that Nftfy presents a long-term Value Proposition completely integrated to Balancer protocol and that we are allocating the major part of the fund in a genuine manner, the request of 5,000 BAL seems to be plausible. However, we understand that there is a competition between projects for a limited amount, and that the responsible for the Grants Program must analyse and decide which proposal fits the best, regards the interest of Balancer Protocol.

Anyway, we are very happy to work and collaborate in this ecosystem, and also to connect Nftfy to this first-class protocol that Balancer is.

1 Like

Thanks Leo-- will get back to you on this within the next few days!

2 Likes

Thank you @immutbl !