PiSwap: Price-Building-Mechanism for asymmetric NFT-markets

Scenario 1 - How it works for users

In this scenario, a user has found a NFT of interest in a marketplace (e.g., OpenSea, Rarible), but they are not sure that the price requested by the seller is fair. The following steps take place when a user uses the service:

1. Find the address of the NFT smart contract, enter it in NFTSwap and click “Create market”;

2. Open a derivative market for that NFT by providing some initial liquidity to the market, by minting the first portion of a Bull & Bear Token and setting the expected price;

3. If already available, the Current NFT price is pulled from the origin marketplace and displayed automatically;

4. If a user thinks the NFT is undervalued, they buy the BULL-Token: the price of this derivative NFT will increase and vice versa if the NFT is overvalued.

5. Each buy/sell of Bull- or Bear-token impacts the price of the derivative NFT.

Scenario 2 -  How it works for artists

In this scenario, artists will be able to determine the price of the artwork they would like to publish and sell. The scenario follows the following steps:

1. Create an NFT by using an individual Smart Contract;

2. List the NFT and open derivative market for that NFT by providing initial liquidity to the market, minting the first portion of Bull & Bear Token and setting the expected price.

3. The more liquidity is provided, the more bull-/bear-tokens get minted (i.e., if liquidity succeeds e.g., 20 times of NFT-price, the NFT would be sold) 

4. the artist is able to sell the listed NFT to the protocol.

Scenario 3 -  How it works for the Liquidity Providers

This scenario is designed for a person that is interested in art, knows the market and involved artists, but is not interested in buying NFTs. The scenario is as follows:

1. A new hidden champion (artist) you know has created a NFT collection. The user is sure that the market will increase with this artist and more people will be interested in his artwork/his NFTs while they are not able to buy the one-of-a-kind-artwork. 

2. Open the NFT market by providing liquidity and setting an initial price. 

3. If more people get interested in the artwork, the traction on that NFT will increase and therefore more trades on the Bull-Bear-Market will happen. 

4. Liquidity Providers receive fees on any trade.

Scenario 4 - How it works for arbitrageurs

In this scenario, a user is not interested in art but is  interested in trading better in arbitrage opportunities. Users can see the Beeples-NFT listed on PiSwap and the evaluation shows a price of 60 Mio. If the user thinks this is not and the NFT should be worth much less, not more than 10 Mio. The following steps take place when a user uses the service:

Step 1: Buy Bear-Token and see NFT-price is going down while Bear-Token-Price is going up. 

Step 2: If more buyers devalue the NFT its price will decrease further more and Bull-Tokens will decrease in price 

Step 3: Arbitrage opportunities pop up by trading the increased Bear-Token against the market.

Scenario 5 - How it works for stakers

If a user is not interested in trading or art or any other investment of that kind, but in interest. The user will be able to gain earnings by staking the protocol token against governance tokens that earns a proportional amount of the protocol fees that result from minting-/burning.

NFTwatch: The collected metadata offered by NFTWatch could be seen as a crawler for newly minted NFTs all over the world. It could end up as a major-NFT-library providing a valid overview on the market, keeping with listed but undiscovered hidden stars. >> it could be implemented by offering a “search-function” based on the NFTWatch RDF graph. It is expected that the visibility of unknown NFTs could be increased as a result and markets for more items will be created.

Bowler: is aiming to create a tool offering customization of smart contract on click, comparable to prefab text modules . This offers creators deploying individualized smart contracts that are evident for PiSwap listings. >> It could be implemented by offering BOWLER-features on PiSwap enabling creators to set up (super)-customized smart contracts before listing their NFT on PiSwap for price-discovery. The direction of the synergie  goes from Bowler to PiSwap, as Bowler provides Services to the PiSwap-protocol/-platform. 

PerunX/Polycrypt: Exchange of information regarding liquidity pool challenges both teams were facing; Synergy on a research level / exchange of information. Possibility of scaling solutions based on PerunX  (cross-chain-approach) in the future.

DW Marking: The project is developing a watermark for data provenance and proving ownership of original data. This feature might be interesting as an add-on for PiSwap as the system is in need for reliable data provenance and ownership. DW Marking could also provide aggregated data to NFTWatch. >> it could be implemented by setting up an API for fetching metadata, providing a classification-system on trust-based provenance data.

For the PiSwap NFT derivative market Dapp the following content is required:

• Smart Contract Address of original NFT

• Specific ID of original NFT

• Relevant blockchain (Ethereum, Polygon, Fantom, BSC, …)