Forget DeFi Summer: NFT Autumn Is Coming!

We’ve all heard the well-known mantra that “bear markets are for builders” until very recently. That said, we felt like no one was building anything very interesting in crypto these days. All NFT drops used the same old recycled concepts. DeFi still hasn’t recovered from Luna PTSD. And best of all, the Tornado Cash sanctions made us wonder if the risks of building in DeFi are higher than we expected. We’ve prepared Sudoswap reviews from crypto expert Reza Jafery for our readers.

Picture altcoins: NFT

But a few weeks ago, when I was wreaking havoc, I finally found the excitement and new thing I was looking for. It started when I stumbled upon a heated argument between crypto phenom Cobie and what seems to be the entire population of NFT Twitter. Cobie triggered NFT collectors when he called NFTs ‘picture altcoins’.

What many saw as a humble insult, I saw as a reset of my Overton window and a litmus test of my cognitive biases. It changed my perspective on NFTs. If you ignore all the nuance and strictly consider the smart contract, picture altcoins are really what NFTs are for.

“NFT exchange Sudoswap is the next new thing”

This simple yet provocative idea is part of how Sudoswap, which just announced a management token (SUDO), is fast becoming ‘that’ place for NFTs these days. Launched in July, Sudoswap is the first decentralized NFT exchange that works honestly with an on-chain automated market maker (AMM).

In other words, Sudoswap is a protocol. That’s why its developers intended it to work with other protocols. The liquidity it provides through its AMM can be accessed by other protocols, dapps and even marketplaces. In contrast, a massive NFT marketplace like OpenSea is a closed ecosystem with a closed order book. Because, although customers provide liquidity, the platform charges transaction fees.

Removing the agent is a great idea, as always. While others have tried to fix the NFT liquidity issue, Sudo, created by the alias Statelayer, 0xmons, 0xHamachi, and the boredGenius team, was the first to actually fix the issue. Platforms like OpenSea and LookRare are marketplaces. But Sudoswap works more like an exchange.

“Sudoswap is to NFT projects what Uniswap is to altcoins”

My understanding is that Sudoswap does for the NFT domain what Uniswap does for DeFi. One reason Uniswap was important when it launched was that it usually charged fees that were held by centralized exchanges. It was also the fact that it gave these fees to liquidity providers, which eliminated the need for traditional market makers.

In fact, this may be the spark that finally brought the excitement of the DeFi Summer of 2020 to the world of NFT. So, NFT Autumn. One of the moments that turbocharged DeFi was when AMMs created liquidity for altcoin trading. It’s possible that NFT Fall could follow the same trajectory. But with its image and AMM altcoins.

Liquidity is an important financial building block. It is a necessary element of any successful token. It is also a missing building block in the NFT ecosystem until sudo’s AMM is released. And a small portion of Sudoswap’s SUDO supply will be distributed to individuals who have provided liquidity for the platform in the past. This is a move that could attract more liquidity to Sudoswap and its AMM as it will attract speculators.

Royalty or transaction fees?

This does not mean that Sudoswap’s ascent to heaven is guaranteed. The community was shaken by a discussion about another feature of the marketplace, namely copyrights. It has been common practice in some marketplaces to allow creators to charge royalties (up to 10% in some cases) when their NFT changes hands in that market. Indeed, this is one of the things that made crypto so exciting for creators. Theoretically, as long as there are new buyers for the artworks, they get paid forever.

Sudoswap has removed royalties. Instead, the protocol charges a ‘transaction fee’ of 0.5%. It also allows NFT collectors to trade significantly cheaper. Statelayer said he and his team were not surprised by the backlash regarding royalties. The real surprise was the creators who came to the platform specifically to print their projects.

Why is Sudoswap better for creators?

It turns out that the creator’s advantage is that if they do it right, they become artists, dealers and brokers. In other words, it is possible for the artist to act as an entrepreneur by starting his project in sudo, providing liquidity and receiving transaction fees from the pool. This is more than they can do in a traditional NFT sale.

The most successful collection to ever try this approach was Brentsketit’s Sudonauts. By launching through Sudo’s AMM, every sale of a Sudonaut NFT added liquidity to the pool. It created a more liquid and, I dare say, less volatile market. This is great for collectors, giving them the confidence that there will always be a buyer for their Sudonaut.

The Sudonauts project is only two weeks old. But the results so far are encouraging. Yes, the current base price is a modest 0.23 ETH. However, it generated a sales volume of 563 ETH. This gave the artist a regular 40 ETH in trading fees from the liquidity pool. He also held 200 of the 2,000 NFTs for himself and his team “to showcase how artists can make a profit while providing deep liquidity for their collections”.

The total market value of the collection is $590,000. Now there is $315,000 liquidity backing it. Meanwhile, it helps create a safer and healthier market for its collectors with a system designed for longevity rather than excitement. Brentsketit described the experiment as an ‘absolutely viable’ alternative to royalties. But he told me ‘it needs to be made easier to use’.

Another brave explorer who delves into the depths of Sudoswap is John Patten, CEO of Treasure DAO. John recently published a blog post outlining an upcoming NFT project called DAO Cats that he plans to launch via SudoAMM. DAO Cats refers to itself as ‘an experiment on DAO owned IP’. However, I am most interested in ‘protocol owner liquidity’ schemes. They lock 40% of the total Cats and Catcoin supply into liquidity pools. But if holders vote it, they remove it.

“Image Altcoins” is a feature, not a bug

I believe the creators will sooner or later realize that ‘NFTs are just picture altcoins’. However, this is not a problem. I’m not trying to troll NFT collectors. Seeing NFTs within this framework opened my mind to a whole new field of possibilities for NFTs.

I’ll end with a question: If you could go back in time to before DeFi Summer, knowing what you now know about what works and what doesn’t, what would you build? Answer this question, then go and create. But add a picture.