Parsec Weekly 12th November
Your weekly dose of DeFi and NFT's, informed by Parsec
Market Overview
-kezfourtwez
It’s been a hell of a week, I can’t lie it feels pretty weird to be writing anything given everything that has happened in the last since Monday, so I will keep it short and sweet.
My heart goes out to anyone that has been majorly affected by the FTX situation, and everyone else in the crypto space in general - it has not been fun, it has not been easy and if you are still here, please give yourself a pat on the back. Give yourself some time to process all of this, stop doom scrolling and spend some time with your family and friends, go touch some grass and this too shall pass.
As most of you are aware, FTX has been exposed as insolvent and anybody that stored funds on there is basically in limbo regarding getting those funds back, many are mentally marking these assets down to 0. This has affected not only your average retail customer, but also VC funds, NFT and DeFi project treasuries. In turn, this has and will continue to have a material impact on the liquidity behind the whole ecosystem. The hole that these events have left in the market is not only monetary, but trust based. We don’t know how long it will take to regain crypto’s footing in the market and for confidence to return and likely this has set it back quite a bit. As a result, jpegs will likely suffer more than most asset classes here, so I won’t sugarcoat it and prepare accordingly. The problem here was not crypto, it was human greed and if anything, this only further stresses the need for proper decentralised finance.
There is not much to write about outside of the traumatic events of this week so I’ve chosen one thing in the NFT market that managed to excited me regardless.
The LP
Granted I found this thanks to one of our devs (geeogi🙏🏼) before any bad stuff went down, but damn it excited me. The royalty debate has been a long and drawn out discussion ever since sudoswap was released. This was a solution that has been talked about since the beginning, but to my knowledge this is the first time that someone has implemented it.
The LP is a 100% on-chain and cc0 experiment that hopes to set that standard of an income stream for creators that doesn’t rely on secondary royalties. An NFT project released on an 11-day dutch auction that only proceeds if all 8000 NFT’s are bought. The LP aims to prove and popularise a liquidity model that gives power back to the creators by letting them own their own liquidity. The dutch auction starts at Ξ1.11 and finishes at Ξ0.011. There are two outcomes, sell out and no sell out, and four simple mechanics.
Trustless escrow - all mint funds are stored in a smart contract, the NFT’s once minted are locked within the minters wallet. If all NFT’s are not sold by the 11th day, then everybody’s bids are refunded and the NFT’s burnt
Instant liquidity - if all 8k are minted, half of the mint revenue + an additional 1k NFT’s will be placed into a double sided liquidity pool to enable deep and instant liquidity
Team mint - if all 8k are minted, the contract instantly mints an additional 1k NFT’s to be owned by the team to act as the projects revenue
Fee’s - If the mint limit is reached, a further additional 1k NFT’s are minted (10k total). These NFT’s are deposited into the pool and earn fee’s on every trade. Every time an NFT is traded, half of the fee is put into a pool for LP holders to claim and the other half is put back directly into the liquidity pool to further fund trading. The team not only owns 10% of the supply to do with as they wish, but will earn 10% of the total trading fees.
Aside from the innovative LP mechanics, the project displays wonderful on-chain pixel art. A sprite sheet is stored on-chain using SSTORE2, each time an NFT is minted the smart contract randomly selects traits and references the sprite sheet. The developer of the LP is 0xDeployer who created his own NFT standard, utilising ERC-2309 to maintain a constant gas price whether it be 1 or 1m NFT’s minted. Remember the days that predated even the Azuki innovation ERC721a? Where each consecutive mint would use almost as much gas as the last? Not anymore, this standard actually used slightly less gas to mint the 100th NFT as it did the first.
At the time of writing we are 6 days into the dutch auction and eight NFT’s have been minted, the current minting price is Ξ0.5632. I don’t expect we see many more mints until the price gets down below Ξ0.1. If the market conditions were any other way inclined right now I think this would be a hit, but we will see.
Beyond the actual DA, the teams goals lie within furthering this model in the hopes of it becoming a market wide solution to the royalty problem. They plan to offer community bounties to help further the development of the system, and create a listings aggregator to support other projects using the model. I think the LP is a really cool innovation with great on-chain art and a great purpose, their values align with true decentralisation which we need more now than ever, and I wish good luck to the team.
Thanks for reading and bye for now, stay on top of the markets with Parsec and we’ll see you next week.
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