How Do Index Funds Bring Liquidity to Nfts?

NFTs are a common topic in the news. A NBA Top Shot video featuring LeBron Jam was sold for $208k. NFTs, which are non-fungible tokens or momentum, continue to dominate mainstream media outlets. In February, DJ 3LAU, the world-famous DJ, sold 33 NFTs. This was the first album to be tokenized in the world and it brought in more than $11M. Christie’s sold Beeple’s NFT (The first 5000 days) for $69.3M shortly after. NFTs, which are digital objects that can authenticate ownership and allow the transfer or sale on the blockchain of assets, are unique. While NFTs are very popular right now, they are not fungible. They are not illiquid. NFTs cannot be transferred like common stock and fungible currencies. It can be hard to determine their value. NFTX, a community-owned protocol, allows ERC20 tokens to be backed by NFT collectibles. NFTX lets users create funds based on collectibles like CryptoPunks or Axies, and then trade them on a decentralized exchange such as Uniswap. NFTX’s remarkable growth is due in part to one fundamental problem. NFT owners cannot liquidate their assets and they can not make a profit without selling. The most important benefit of DeFi (ERC-20s) is tokenization of NFTs, which creates nft liquidity and increases traceability.

Why Index Funds?

Index funds are financial instruments that track a group of assets’ values. An index fund tracks the value of a set of assets. What makes an index fund so attractive? Investors who wish to have exposure to a broad range of assets can benefit from an index. Investors can invest in an index without needing to learn each component separately. Some people love learning as much about investing as possible. Some people don’t have the time or desire to learn. For traditional investors looking for nft loans, index funds are still an attractive option. The same benefits are being seen in the NFT space. You can also use index funds to set prices for NFTs with similar characteristics. This includes PUNK FEMALE, a CryptoPunk type with a rare trait. Moon Cats was discovered by the Ethereum community last Wednesday as one of the first NFT-related projects in the space. Only one cost was involved in mining Ethereum. That was the transaction fee. Owners may adopt cats. OpenSea allows owners to list their cats, and they can also join the NFT20 moon cat pool. You could exchange the Moon Cat for 100 $MCAT20 tokens. This created a floor price at $1700 USD. The $MCAT20/ETH pool had a total of $300k liquidity. These index funds can also used to price NFT assets that are not in the basket.

How it works

NFTX and similar protocols offer both single- and combined fund tokens. One fund token can support both an ERC-20 and NFT contract. A $PUNK-BASIC token can be used to swap a nft collateral token 1 for a basic Punk.Combination funds combine multiple funds.They give you more exposure to a single token.The $PUNK portfolio allows the owner to have exposure to all single fund tokens.The weighted average is used to determine the token price.