ABOUT THE PROJECT
PiSwap: Price-Building-Mechanism for asymmetric NFT-markets
Is Beeples $69 Mio NFT fairly valued? Should it had been even more? Or just a fraction? The current NFT-Market often shows an imbalance of power in transactions causing market failure in the worst case. There is a lack of transparency in regard to price building and quality.
As of August 2021, the NFT market has exceeded a monthly trading volume of US$680 million, showing a growth of 6,000% in 2021 and individual sales of roughly 220,000 (08/2021; see nonfungible.com). While 53% of these sales (117,023) took place on the Primary Market, the trading volume of $107 million achieved there represents only 16% of the total market. The Secondary Market thus accounts for the lion's share of the total volume of the NFT market. In figures its trading volume is around US$580 million per month what is 450% compared to the Primary Market.
Our Solution – PiSwap by Bull-Bear-Token
1.) Crowdsensed Market-Enabling
PiSwap solves the lack of potential buyers on primary market and the price fluctuations on secondary market by completing and enabling it to a wider audience.
2.) Decentralized Price-Building
Traded on exchanges Bull-Bear-Concepts (openend long/short) offer a crowdsensed and transparent price-building mechanism to determin the value of the underlying asset (here: NFT).
3.) Automated Liquidity-Providing
Enabling NFT-markets sufficient liquidity is key. By minting bull-bear-token any user can provide liquidity to the system for any NFT (see UniSwap) acting as market maker.
Motivation for the project:
One common issue of NFT-markets is their oftentimes limited liquidity. Improving liquidity on decentralized primary market platforms is therefore achieved by decentralizing the automated market-maker-modell present markets know from traditional exchanges. Market participants like UniSwap offer derivatives – swaps – by opening up a trading pair providing liquidity. All that runs perfect in case of interchangeable assets but is totally limited for not otherwise replaceable tokens like NFTs.
Due to their uniqueness or at least their predefined number of unique tokens NFTs are available for only a small number of holders, mostly just one. Opening the NFT-market to investors by offering unlimited derivatives is comparable to the traditional ETF-market and its idea of mirroring the price development of an underlying asset (e.g. Gold) or assetclass (precious metals).
Generic use case description:
Providing markets with sufficient liquidity and widely accepted price-building-mechanisms is inevitable for the functioning and completeness of the markets – PiSwap is inevitable!
The foresai is relevant for any NFT-market in the future, might it be patents, real-estate, supply-chain, CO2-emissions, software-licencing, fashion, Twitter, collectibles, art, gaming, sport, music, video, … (see here).
PiSwap is created as a decentralized autonomous market mechanism for primary and secondary markets. Its value proposition is:
1. Increasing Transparency
2. Increasing Completeness
3. Increasing Access/Participation
The innovation of PiSwap is the usage of market-mechanisms traditionally used in FIAT and stock markets to predict the value of the underlying asset, the so called Bull-Bear-Certificate.
Enabling this tool for the NFT-markets will expand transparency in price-building, market completeness by providing access to almost any new asset and would open up arbitrage trading options strengthening the previous mentioned price-building mechanism.
How these functionalities can be integrated within the software ecosystem:
The smart contracts can be deployed and interfaced by other projects utilizing their functionality for specific functionalities. If necessary, smart contracts can also be adjusted.
Gap being addressed:
1.) Asymmetric Markets
No proper match of primary and secondary markets in regard of their basic market functions.
2.) Uncertain Value
Investors seek participation in specific NFTs but are uncertain about specific value due to lack of transparency in price-building.
3.) Illiquid Markets
Especially the primary NFT markets are facing monetary illiquidity while secondary markets face asset illiquidity.
Expected benefits achieved with the novel technology building blocks:
PiSwap is not only differentiating to the state of the art. Rather than this it’s innovating or even disrupting the NFT market at all by distributing an automated market maker modell with an automated liquidity providing. At the time of writing there is no such solution available and therefore PiSwap would open up new possibilities.
The basic concept of swapping assets is well known and used as well in the traditional financial markets as well as in the blockchain market. The innovation of PiSwap is the usage of market-mechanisms traditionally used in FIAT and stock markets to predict the value of the underlying asset, the so called Bull-Bear-Certificate.
Potential demonstration scenario:
Ask yourself if you would expect the Beeples NFT at a valuation of $ 69 Mio and if this is the real value… or is it just a hype? PiSwap helps defining the price – crowdsensed.
1.) Find Beepls smart contract address
a. List at PiSwap and
b. set price at ≈ 15,300 ETH (≈$ 69 Mio)
c. Enable market by minting trading pair
d. Provide liquidity and/or
e. Buy bull-token if NFT seems undervalued or
f. Buy bear-token if NFT seems overvalued
g. Price reflects crowdsensed value
2.) …… sell/buy bull/bear-token for arbitrage
3.) Sell NFT o market if sufficient liquidity provided
4.) Buy NFT from market
Daniel is an experienced Blockchain Developer on Ethereum and various other protocols.
Andreas is 20+ years working as business developer and marcom specialist in the financial industry.
Marc is an entrepreneurial business angel with deep understanding of the EU financial regulation and legal and tax related aspects in financial business.