Table of Contents

• Opening Thoughts

• NFT Liquidity Maxi(malism)

• The “Exit Liquidity” Meme

Opening Thoughts

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Understanding what is underway in the NFT space is paramount, hence the idea to kick off this series. Before kicking this off, I implore you to think deeper about what’s possible when you start to unlock what were once considered to be ridiculous jpeg’s.

From the veNFT being utilized by Velodrome’s unique flywheel (see below), to an entire collection dedicated to representing an LP position within a vault by Spice, the NFT space continues to mature. Yes, these two approaches implementing the ERC-721 standard differ greatly, but ultimately tie back to the nature of the underlying tech.

Today, there are now more lending protocols than one can count on a number of hands. Niche aggregators are making their way into existence, but soon, there’ll be a way to tie everything together in one seamless knot.

The NFTfi space in its full form will be the largest manifestation of monetized culture.

NFT Liquidity Maxi(malism)

My personal thesis on the NFT space, from inception → now, taking an example from astronomy (disclaimer, black hole references supplemented with detailed links):

NFTs have largely been floating through space, finding new life in different pockets of the universe; Be it in “blue-chip” collections that experience hyper-growth, or baking NFTs somewhere into DeFi token models through governance representation, emissions, etc. As time has passed (with a focus from 2021 - 2023) the space itself has become infectious, drawing in users from every corner of the crypto scene, veterans and rookies alike. In early 2022, the NFT space as a whole began to cross the path of a supermassive black hole (NFT finance), pulling in the ecosystem as a whole. Approaching the Event Horizon, a wave of innovative ways to unlock liquidity from these notoriously illiquid jpeg’s followed, ultimately leading to the NFT Liquidity Singularity. By the time the ecosystem has reached the Singularity, the space has transcended to new heights with NFT standards leading the pack towards mass adoption and becoming near omnipresent, liquidity for jpeg’s is just one step in the ultimate roadmap of digitizing most things in our daily existence. IOW, liquidity becomes the norm for NFTs.

The “Exit Liquidity” Meme

One can argue that liquidity provisioning (actual trade pool e.g. ETH | NFT) for NFTs is a negative-sum game, but I’d argue it’s far more value additive than hanging carrots (tokens) over users heads, on any platform. While the short term surge in volume does look pretty as a placeholder and engagement driver, long term this leads to mostly disappointment. For example, only 1 out of the top 10 Blur farmoooors in the last 24hr is net positive on realized profit (per wallet basis ofc) highlighted in green:

If LPing on AMM’s = exit liquidity, then farming on Blur (+ others like it) = exit liquidity^3.

With the rise of other NFT AMM’s like Caviar & Collection, the race is on to grab marketshare from Sudoswap. I foresee tons of innovation in this space as newcomers have taken critical pitfalls from first movers and iterated very quickly on them, translating to greater trader UX, which should in turn drive greater volume.

The reality of the NFT space is, that NFTs are rapidly becoming fungible.

Above, Metastreet talks about NFT-backed debt and how the debt penetration rate at the end of 2021 was at 30bps, I’d be curious to see what those numbers look like today, my bet is that its still nowhere near institutional art lending, guaranteeing there is still massive upside in lending. No need to even discuss the other segments of the market that have tremendous upside potential this time.

TLDR; gib more exit liquidity.

Disclaimooor

This is me channeling my thoughts in written pieces that may summarize current market thoughts but will never be to endorse any project, or method mentioned nor give any financial advice. Blz do not fomo into anything you may read from myself or any anon(s) or pseudoanon(s). I also may or may not hold any of the tokens mentioned and/or contribute to any protocols/DAOs mentioned. Stay safe.

WAGMI,

0xOmnia