Authors

Finesseboi, ChopChop

Glossary

• SLP
• Onsen
• Impermanent Losses
• Allocation Points

Summary

As it currently stands $Punk-Basic and other punk-based single (D1) funds do not have enough liquidity. Users would like to purchase $Punk-Basic but the slippage makes it a less than optimal solution. This proposal aims to rectify that, adding additional liquidity by creating NFTX/Single Fund pairs on SushiSwap, putting the currently inactive NFTX held by the treasury to work.

Rationale

The market currently values single funds more than combined funds. This may be the case because funds do not have enough liquidity. Adding liquidity to punk-basic will allow us to test (and most likely confirm) that single funds are a product with more demand. As it currently stands our most successful launches, such as the Hashmasks fund, came from organic growth with single funds. It is in our best interests to replicate this as much as possible and acquire liquidity from the ground up. If liquidity is increased and single funds are shown to be viable, then we will be able to move towards expanding our product (combined funds).

Effect

Opportunity

• CryptoPunks currently have the most volume on OpenSea, by lowering the spread on Punk-Basic more users would acquire punks via NFTX versus OpenSea
• If Punk-Basic is a success then more users will want to mint and provide liquidity with their floor punks as the opportunity cost would be higher if they don’t because of trading fees.
• NFTX as a DAO would capture most of the trading fees.

Risk

• By adding liquidity ourselves we may be subject to impermanent losses as the CryptoPunk floor price changes.
• Pursuing single funds might prove to be a waste of time as adding liquidity may not be enough for demand to increase and prove PMF

Specifications

We need ~$5,297,600 of additional liquidity for a purchase, or sale, of 1 Punk-Basic to be realized with minimal slippage

• Use the 86 Punk-Basic tokens currently in the treasury to add more liquidity to the market.
• Add 86 Punk-Basic with the equivalent value in NFTX, based on market rates of ETH/Punk-Basic at time of listing, to create a new pool on SushiSwap: NFTX/Punk-Basic.
• If proven successful, move forward with the same LP strategy for all current and upcoming single funds, superseding the previous liquidity allocation proposal from ChopChop.

Funding request - Yes - Implementation does not require additional funding

• NFTX from the treasury to match the value of 86 Punk-Basic tokens upon listing.

Communication

• Discord: https://discord.gg/xcJkxMXSR8
• Forums: https://forum.nftx.org/t/rewritten-xip-4-boost-liquidity-of-punk-basic-fund-with-nftx/171

Quorum

• Minimum Quorum: More than 10% of circulating, non-treasury NFTX must participate for a proposal to Pass.
• Passing Threshold: More than 50% of voting tokens must vote FOR for the XIP to Pass. For changes to the NFTX contract, more than 70% of voting tokens must vote FOR for the XIP to pass.