Research Summary
The report discusses the Flooring Protocol, a new solution for Non-Fungible Token (NFT) liquidity that went live on October 15th. The protocol, created by NFT OG player FreeLunchCapital, fragments NFTs into ERC-20s, attracting participation from Azuki Elementals, Pudgy Penguins, and y00ts holders. The report also explores the concept of NFT fragmentation, the tokenomics of the Flooring Protocol, and the impact of the current bear market on NFTs.
Key Takeaways
Introduction of Flooring Protocol
- Launch of Flooring Protocol: The Flooring Protocol, an NFT liquidity solution, was launched on October 15th. It fragments NFTs into ERC-20s, attracting participation from Azuki Elementals, Pudgy Penguins, and y00ts holders.
- Creator of Flooring Protocol: The protocol was created by NFT OG player FreeLunchCapital.
NFT Fragmentation into ERC-20
- Concept of NFT Fragmentation: The Flooring Protocol fragments high-value NFTs into 1,000,000 ERC-20 μTokens. For instance, when a user deposits one Pudgy Penguins NFT into Flooring Protocol, they receive 1,000,000 μPPG tokens.
- Ownership of NFT after Fragmentation: There are two scenarios of giving up and retaining the ownership of NFT after fragmentation of μTokens. Users can either deposit an NFT into the Vault and relinquish ownership or retain ownership by choosing Safebox, specifying a storage period, and staking a certain amount of FLC.
Tokenomics of Flooring Protocol
- Launch of FLC: The Flooring Protocol platform token, FLC, was launched alongside the protocol and briefly surpassed a $4 billion FDV before retracting.
- Relinquishment and Retention of Ownership: From Vault and Safebox, the relinquishment and retention of ownership, it can be observed how different NFT within the collection have different liquidity and price discovery mechanisms.
Impact of Bear Market on NFTs
- Bear Market for NFT: In the current backdrop of a bear market for NFT and the outflow of on-chain funds, ample liquidity inevitably leads to continued declines, as evidenced by the Blur Bid Pool.
- Enthusiasm for Flooring Protocol: The enthusiasm for Flooring Protocol and whether it can attract on-chain capital to NFT and lead NFT out of the predicament remains to be observed.
Actionable Insights
- Investigate the Potential of Flooring Protocol: Given the innovative approach of Flooring Protocol in fragmenting NFTs into ERC-20s, it may be worth exploring its potential impact on the NFT market and liquidity solutions.
- Examine the Impact of Bear Market on NFTs: With the current bear market for NFTs, it is crucial to understand its implications on NFT liquidity and price discovery mechanisms.
- Assess the Role of Flooring Protocol in NFT Market: The role of Flooring Protocol in attracting on-chain capital to NFTs and potentially leading NFTs out of the current predicament should be assessed.
