The Evolution of CSWAP NFTfi Marketplace
Up until this point, CSWAP NFTfi Marketplace inventory has been provided by the team. Each collection consists of a singular liquidity pool with a linear price curve. While this format has been successful, earning the platform over 2M ADA in volume, CSWAP NFTfi is set to EXPLODE with the upcoming community liquidity program. Users will finally be able to add their own liquidity, earning fees in both CSWAP and ADA, while implementing dynamic market making strategies.
How NFTfi Marketplace Community LP works
When a user creates an NFT liquidity pool, they will provide both NFTs and ADA to provide inventory for a specific collection on the platform. Each user’s liquidity pool must have a minimum amount of ADA: 1 NFT worth of ADA or 25% of the total NFT value, whichever is greater. This requirement will ensure that there is sufficient ADA liquidity on the platform. A user can also provide ADA only if they are interested in creating an NFT buying strategy using one of the curve types (while also receiving fees!).
When setting up a liquidity pool, a user can assign up to five CSWAP Allies NFTs in order to receive a CSWAP reward boost every time someone buys or sells an NFT out of his/her specific pool. A user can maximize volume in their pool by setting competitive pricing.
NFTfi Marketplace: New Mechanics
Much of the Marketplace will remain the same; there is one key change. With multiple people providing liquidity for the same collection, listings with different price curves and curve values will be aggregated and displayed on the same page. This will present as pricing “chunks” on the collection page, however the lowest buy price and highest sell price will still display. A user who sells an NFT will get the best possible price, and the pool fees will be rewarded to the LP provider who gives the best pricing.
To reiterate, when an NFT is bought out of or sold in to a specific liquidity pool, whoever owns that pool will earn the rewards, other pool operators will not. The most successful pool operators will likely be those who can price their assets at or near the fair market value as those are likely to be the pools that do the most trading volume. Users can experiment with different curve types, curve values, and pool fees to maximize their results.
CSWAP Allies: Dual Utility
1)Embedded LP
CSWAP Allies are not your ordinary Cardano NFT. These CIP-68 NFTs uniquely house embedded LP tokens for ADA, $CSWAP, and tokens from our partner projects. We were the first to implement this tech on any chain, as Ethereum just implemented ERC-404 to achieve something similar and BOZO hybrid is picking up steam on Solana.
We believe Allies are even more sophisticated than the Ethereum and Solana counterparts, because of the embedded LP and future integration with a fungible dex. This innovative functionality gives Allies significant value, offering holders both downside protection and upside potential.
2)NFTfi LP Boost
As many of you are aware, CSWAP is on the verge of launching the community liquidity program. This initiative will empower users to become their own NFT marketplace. In supplying NFT/ADA liquidity to the NFTfi Marketplace, users will not only contribute to a vibrant trading ecosystem but also earn CSWAP/ADA rewards in the process.
Allies can be locked with user provided liquidity to provide a multiplier on CSWAP rewards earned via user defined pool fees. A user can include up to 5 Allies NFTs which combine to increase CSWAP rewards when another user buys from or sells into his/her liquidity pool.
Types of Boosts
By locking 1–5 Allies NFTs with LP, a user will receive a calculated boost of CSWAP rewards.
Below is an overview of the Allies boost program.
Standard Boost
Please take notice that if a user holds more than 1 of each tier, then their calculated boost will be subject to stacking penalty. This is an anti-whale measure designed to incentivize broader NFT distribution across the community.
Sample combination:
Full Metal Combo— If you hold one of each rarity tier (Bronze, Silver, Gold, Platinum), then you will avoid the stacking penalties for having multiple of each tier. The designs do not need to match.
Holding 1 of each tier will give you a 93% reward boost (8% + 15% + 30% + 40%). A 5th NFT will be subject to the stacking penalty. This is likely one of the most capital-efficient combinations available, if you are able to secure the rarer tiers economically.
If you supply a 5th NFT, then that NFT will be subject to the stacking penalty.
Power (Ranger) Boost — within a specific rarity tier, if you hold one of each design, you will receive a significant boost.
Allied Boost — This boost requires that the design of your NFT matches the collection for which you are providing LP, so it will only apply to the partner project NFTs. For example, if you are using 1 or more KWIC Allies NFTs to boost your $CSWAP rewards on the KWIC/ADA NFT pool , you will receive the following boosts:
Max Allied Boost — If you hold 1 of each rarity tier with the same design that matches the collection you’re providing NFT/ADA LP for, then you will earn a max allied boost for that collection.
Max Allied Boost: 112.50%
For example, if you are supplying NFT/ADA LP for Inmates, and you supply Inmates Allies NFT + each rarity tier, plus an additional bronze NFT, you would earn 112.5% + 6.75% = 119.25% extra CSWAP as an LP on that pool.
As you can see, the higher tier NFTs are more powerful but there are anti-whale mechanisms built into this, and the various boost options still make the lower tiers very useful.
New fee structure
We are departing from the status quo on Cardano NFT marketplaces and introducing 50/50 fee splitting between the buy and sell side of a transaction, rather than fees on the sell-side only.
There are three main types of fees collected on each transaction:
1) Platform fee — 1.5% — supports platform operating costs / CSWAP team.
2) Pool operator fee — between 1–3%, set by the pool operator when they create the liquidity pool. They will earn this percentage whenever an asset is either bought out of their pool or sold into their liquidity pool. Pool operators will receive 3/4 of this fee in ADA and they will also accrue 1/4 of this fee in the equivalent amount of $CSWAP. The $CSWAP is the amount that can be boosted by Allies multipliers.
3) Royalties — varies based on the collection. Previously, royalties were only collected when an asset was sold into the liquidity pool. Now, the royalty fee will be split 50/50 between the buy side and sell side.
For example, if a collection has a 5% royalty, half (2.5%) will be collected when an asset is bought out of the liquidity pool, and the other half (2.5%) will be collected when an asset is sold into the liquidity pool. This makes the fee structure quite a bit more attractive to sellers than the previous fee structure, which should promote trading activity and reduce friction for both sellers and buyers, stimulating volume and market opportunities.
